The Australian share market’s four-day winning streak has come to an abrupt halt.
The ASX200 fell almost 1%, as the big miners dragged following a slump in the iron ore price.
The index closed at 5,889.30, down 44.06 points or 0.74%.
Iron ore continued its free fall overnight, closing under $70 a tonne.
Rio Tinto fell by 4.71% while BHP lost 4.03%.
Fortescue Metals — more closely correlated to iron ore prices as it is solely an iron ore miner — ended the day down 6.78%.has shed 7.12%.
Fortescue was down by as much as 7.12% in early afternoon trading. This chart from investing.com shows the fall:
As a key raw ingredient in steel, iron ore’s retreat has followed a fall in steel prices as the demand outlook in China grows cloudy.
Australian steel producers weren’t spared today. Bluescope Steel got smashed, finishing the day down by 7.69%:
Iron ore has now lost 28.3% from its peak, as strong steel production and speculation in the market drove prices to a high of $94.86 a tonne in late February.
Since then sentiment has grown increasingly bearish. Along with decreased steel demand, inventory levels for iron ore have climbed to a record high.
Chinese iron ore port inventories currently sit at 131.35 million tonnes, according to data provided by Shanghai Steelhome, just shy of the all-time record peak of 132.45 million tonnes seen in late March.
According to data released by China’s National Bureau of Statistics earlier today, Chinese iron ore imports totalled 95.56 million tonnes in March, the second largest monthly total on record.
Over the past year, China imported a total of 1.054 billion tonnes of iron ore, the largest 12-month total on record.
It was also 8.9% higher than the total imported in the 12 months to March 2016.
It’s not just today that big miners have been feeling the pain. Since February 21 when iron ore prices peaked, BHP is down 11%. Rio Tinto has lost 17%, and Fortescue Metals is down 31%.
In a generally bleak day across the market, the ASX200 Financials Index fell by 0.52%, with all the major banks lower led by ANZ down 0.78%.
In keeping with the risk-off sentiment, gold miners were one of the few bright spots in today’s session, with Newcrest Mining up by 0.6%.