Iron ore just can’t find a sustainable bottom yet as each new low begets further lows, sentiment sours and traders do what traders do – hit the sidelines.
Last night the September futures contract for 62% FE iron ore swaps fell $1.41 tonne to $88.67.
Key to the price action is the simple market dynamics of a lag of buyers unsure of where the bottom is going to be together with large inventories on Chinese wharves.
What it means locally is that miners such as Atlas Iron, Arrium, BC Iron, Fortescue Metals and, to a lesser extent, BHP and Rio Tinto will likely come under pressure today on the ASX. Last night’s SPI 200 futures suggest a small fall on the ASX today but if the sellers get hold of the miners, the losses could be much deeper.
Business Insider has noted that the long-term monthly technical outlook favours an eventual move toward the $70 a tonne market and without a positive and sustainable circuit breaker, it’s likely traders will all be eyeing that same chart.