The spot iron ore price continued its slide overnight, dropping to the lowest level seen since July 27.
According to pricing by Metal Bulletin, in US dollar terms the price for benchmark 62% fines has fallen 25.7% year-to-date, or $18.33.
However, when priced in Australian dollar terms, shown in the blue line above, the decline has been far less in both percentage and dollar terms. So far this year benchmark ore priced in Australian dollars has fallen $14.32, or 16.41%.
While still a hefty decline, it’s yet another example of benefit of the lower Australian dollar in helping to make Australia more competitive from an international perspective, not only for miners but more currency-sensitive sectors like tourism and education.
Yes, many miners are multinational companies that have foreign currency liabilities, but some of their costs are in Australian dollars. The falling Australian dollar is acting as a shock absorber for income levels, both for miners and the broader Australian economy as a whole.