Chinese iron ore miners are getting crushed by low prices

Chairman Andrew Forrest. Paul Kane/Getty Images

For the first time this week the iron ore price has fallen, taking the price back below the $60 a tonne level.

According to Metal Bulletin, the spot price for benchmark 62% fines fell by $1.10 to $59.38 a tonne, snapping a three-day, 12% rally in the process. Iron ore futures on the Dalian Commodities Exchange fell by a similar margin in overnight trade.

Despite the modest decline, the spot price is still up 36.3% year to date.

Helping to partially explain the scale of the rally, Chinese domestic iron ore production continued to slide in the early parts of the year.

“China’s domestic iron ore production continued to fall during the first two months of the year with volumes down 6% year-on-year amid weak prices in a low season,” said analysts at Metal Bulletin on Thursday. “The country’s run-of-mine (ROM) output totalled 161.9 million tonnes in January-February, according to latest data from the National Bureau of Statistics (NBS).

While the NBS failed to offer production figures for individual months, the steep decline in the iron ore price over December and January saw great swathes of high-cost Chinese mines shutter production in January.

“Only 30% of domestic mines were running in January, squeezed out of the market by low-priced imports, Chen Guanyin, analyst at Minerals & Jingyi Futures said at an iron ore conference in Beijing last month,” said Metal Bulletin.

“In Qian’an, a major iron ore hub in north China’s Hebei province, only three miners were operating, compared with more than fifty previously.”

In March, Chinese iron ore imports rose to 85.77 million tonnes, an increase on the 73.61 million tonne figure reported in February. The increase took imports over the past year to 969 million tonnes, the highest 12-month total on record.

NOW WATCH: Money & Markets videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.