The iron ore price slid for a third consecutive session overnight, extending losses from October 12 to nearly 7%.
According to Metal Bulletin, the spot price for benchmark 62% fines fell by a further 14 cents, or 0.26%, to $52.79 a tonne.
Pointing to the likelihood of further weakness in the spot price arriving this evening, Chinese iron ore futures continued to tumble overnight with the most actively traded January 2016 contract on the Dalian Commodities Exchange falling by a further 0.97% to 358.5 yuan.
Analysts at Metal Bulletin offer a simple explanation as to why the spot prices remain under pressure.
“BHP Billiton’s Western Australia iron ore output rose by 8% year-on-year on a 100% basis in the September quarter, mainly on the ramp-up of its Jimblebar mining hub,” they wrote in a research note released overnight.
“Major mining companies continue to ramp up production while demand from China, the world’s biggest consumer of iron ore, wanes amid a depressed steel sector.”
In the year to September Chinese iron ore import volumes grew by just 1.7% to 86.9 million tonnes. Between January to September, imports totalled 699 million tonnes, largely unchanged from levels seen over the same period a year earlier.