Why Does Iron Ore’s Price Drop?

In last September-October, iron ore’s price is dropping about 20%. Even though the price reached the peak in February : USD 90 per ton. The price is increasing in February, June, and August according to report, but soon falling down. What is the reason?

It is because of China’s iron ore demand.

Government of China planned to mandate a significant cut of steel production in the country during winter to decrease pollution. This could decrease steel production about 30 million tons and decrease iron ore consumption about 50 million tons.

The immediate demand decreasing surely impacts Western Australia, which is the largest producer and exporter of iron ore in the world, accounting for 37% of global production in 2015. 94% of iron ore is produced from Pilbara. Of course, China is the biggest iron ore export market for Australia commodity, taking about 82% of production.

China’s demand increased price of iron ore from USD 30 billion per ton (2013) to USD 150 per tons (2011-2015). Australia’s iron ore sales also increased from 243 billion tons (2005-2006) to 757 billion tons (2015-2016).

Despite the drop in prices, iron ore mining industry forges ahead to hire new workers. By the end of August, Rio Tanto opened the USD 468 billion Silver Grass iron ore mining in Pilbara. Around the area, Balla Balla Infrastructure Group also plans to forge ahead with USD 5.6 billion iron ore export facility.

Source : www.miningpeople.com

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