Last week it was all good news for Australia’s iron ore sector. Spot prices were up over 30% from their early April lows. Mines were being restarted. Notable investors were buying stock. Budget forecasts, while still far lower than a year earlier, were probably slightly higher than they may have been just a few weeks earlier.
However, as quickly as it arrived, it may be about to unravel just as fast.
According to Metal Bulletin’s iron ore index, the spot price for 62% fines – one of the key products shipped from Australia – tumbled a further $US1.41, or 2.5%, to $US57.12 a tonne on Wednesday.
The index has fallen for seven consecutive sessions, losing 10%, and now equals the longest losing streak seen since August 2014.
Coincidentally, and somewhat ironically, the down-trend began on the day Australia’s federal budget was delivered.
Although up 21.3% from its April 6 low of $US47.08 a tonne, the index has fallen 20% YTD and by a whopping 50% from this time a year ago.
While there are many who believe the price will head far lower, it’s likely that a certain Australian treasurer, along with many involved in the iron ore sector, will be hoping that’s not the case.