Iron ore price continues to drop

Iron ore prices fell below $ 89.2 from $ 90 per ton. This decline is becoming very threatening, similar to the situation in September 2012. Earlier lows were very short-lived, but extending the recession by five years threatens the viability of even large-scale producers such as BHP Billton, Fortesque and Rio Tinto.

Weakening oil prices have created a red alert in the market, with a 13 percent decline in price over the past two months to $ 93.75 a barrel. The sudden drop in prices may be related to the situation in the Middle East. The recent improvement in the dollar has proven that producers cannot depend on the depreciation of the dollar. The average iron ore price in 2013 was $ 135 per ton, while now, in 2014, the average iron ore price is $ 111 per ton.

The sharp decline in price may be due to a weak increase in demand from China, and shipments by sea to China continue to grow, especially from Australia. Since the production of domestic iron ore raw materials in China is the most expensive in the world, it is cheaper for the country to import rather than produce. In the event that the average price of iron ore turns out to be below $ 90 per ton in the current fiscal year, then many companies will suffer serious losses.