On Friday, financial markets suffered some of their largest declines since the global financial crisis. The iron ore price was not immune.
According to Metal Bulletin, the spot price for benchmark 62% fines fell by $1.28, or 2.47%, to $50.61 a tonne.
The loss, the largest in percentage terms since June 14, trimmed the year to date gain to 16.2%.
“Commodities markets worldwide generally fell in the morning following exit polls from the referendum indicated Britain was likely to vote in favour of leaving the European Union,” said analysts at Metal Bulletin.
The group also notes that the steep decline came despite news that medium and larger Chinese steel mills remained profitable in the first four months of the year, a stark reversal from the trend seen at the end of 2015.
“Medium-sized and large steelmakers in China made a combined net profit of 64 million yuan ($10 million) during the first four months of this year,” according to Wang Liqun, deputy chairman of the China Iron & Steel Association.
“The mills had been experiencing losses at the end of last year.”
Ever the optimists, Chinese traders don’t expect the weakness in the spot iron ore price to be sustained for any great period of time, driving Chinese futures higher in overnight trade on Friday.
The most actively traded September 2016 contract on the Dalian Commodities Exchange finished trade at 392 yuan, up 1.03% for the session.
Trade will resume at 11am AEST.