The relentless fall in iron ore in 2014 has drifted out of the headlines but as this chart from HSBC shows, there has been no let-up recently with more weakness in March.
HSBC Economics said of global commodity prices during the month:
Metals prices were a key area of weakness. Iron ore prices fell -8.1% in the month, to be -18% lower so far this year. Copper prices also fell -5.2% in the month. Indicators of Chinese activity have continued to weaken recently and this has weighed on the outlook for industrial commodities demand more broadly, with tight credit conditions in China a further disruptive factor.
It is also apparent why news of BHP potentially demerging its aluminium business is also making headlines again over the past 24 hours, even though it has been likely for many months.
Yesterday’s RBA Commodity Price index suggested that the Aussie dollar is around 10% overvalued and this report from HSBC simply reinforces that with our biggest export tanking in 2014, the RBA is probably right to be wanting the Aussie dollar lower – otherwise our export earnings might tank too.