Iron ore is crashing.
The spot iron ore price was smashed overnight, suffering the largest one-day percentage loss seen in over a year.
According to Metal Bulletin’s iron ore index, the spot price for 62% fines slumped by $3.57, or 6.03%, to $55.63 a tonne. The decline was the largest seen since May 30 last year.
With Australia’s economy highly dependent on resources exports, every $1 fall in the iron ore price costs the federal government hundreds of millions of dollars in lost revenue.
Since hitting a multi-month high of $65.61 on June 11 the spot price has now fallen by 15.2%. From the beginning of 2015 the decline extends to 21.9%.
On Wednesday China’s steel industry PMI for June, a report on overall activity levels for Chinese steel makers, plunged to 37.4 from 42.4 in May. A figure of 50 is considered neutral, meaning conditions in June deteriorated sharply.
Such a decline was always likely to place pressure on iron ore and coking coal prices. It seems that’s already being felt.