Iron ore fell to a record low on a spot price basis on Wednesday with the Northern China 62% Fe import price including freight and insurance (CFR) dropping 2.4% to $40.60 a tonne.
After a strong recovery from its July low, the steelmaking raw material has been on a relentless decline since mid-October. Losses so so far this year come to 43% following. Today’s price compare to $190 a tonne hit February 2011 and an average of $135 a tonne in 2013 and $97 last year.
For an iron ore price below $40 you have to go back to 2007 when annual contract pricing between the Big 3 producers – Vale, Rio Tinto and BHP Billiton – and Chinese and Japanese steelmakers were still the industry norm.
The iron ore price has become a one way bet as an ever deepening glut combine with slumping demand to push down the price.
Vale this week lowered its forecast for 2016 shipments by 10% due to outages at Samarco, but the world’s top producer remains on track to add 100 million tonnes of capacity compared with 2015 levels within just three years.
Number two Rio Tinto is well on its way to reach 360 million tonnes in the next few years, while BHP Billiton is on target to grow capacity to 290 million tonnes per year some time during 2017.
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