Photo: NZ Defence Forces / Getty (File)

The value of one of Australia’s most important exports, iron ore, is tanking.

Metal Bulletin said the iron ore spot price fell by over $5 a tonne, fixing at $US75.45/tonne, a change of $5.47, or almost 7% down on 24 hours before. It continues a weakening price trend for the commodity seen over the past few days on markets.

Metal Bulletin said it was the largest single daily decline since March 2016. It added:

Meanwhile severe declines were seen across the iron ore grade boundaries today as support for benchmarks gave way. China’s spot rebar prices experienced sharp falls on Friday after the billet and futures markets tumbled. Billet prices plunged late on Thursday, which worsened sentiment in the spot rebar market in a big way, resulting in the price drops. The northern Chinese market, in particular, experienced a steep fall.

This follows an implosion on futures markets in Asian trade today.

Volatiliy in the iron ore prices has been a major concern for market participants over the past year.

Large moves in the market price for iron ore can have a significant impact on Australia’s federal budget.

Previous estimates have put the effect of a $1 change in the price at around $70 million per year on the budget, although the federal treasurer Scott Morrison has adopted a clear conservative policy over recent years that assumes iron ore prices at the bottom of market expectations.

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