This year’s budget-boosting run in iron ore prices has hit a snag, with prices falling after mining giant BHP Billiton poured cold water on talk it would slow supply and China moved to curb speculation in steel and iron ore markets.
But even after a 6 per cent drop on Friday night, prices of the nation’s biggest export remain higher than anyone had previously expected before the end of last week, as Scott Morrison prepares to hand down the federal budget next week.
Benchmark iron ore prices tracked by Metal Bulletin fell $US4.13 to $US66.33 a tonne overnight on Friday, taking some gloss off a stunning run in prices last week that saw them hit a 15-month high of $US70.46 the previous day.
The fall came as Chinese reinforcing steel prices slipped 5 per cent, BHP’s iron ore boss Mike Henry warned more supply was still coming and Goldman Sachs said prices would fall to $US35 before the end of the year.
The price drop only slightly pared a surge earlier in the week on the back of BHP and rival Rio Tinto pulling back West Australian iron ore guidance as Chinese demand strengthened.
So after Friday night’s fall, the weekly gain was still 13.5 per cent.That’s the biggest in 3½ years, and leaves prices up 73 per cent since they bottomed near $US38 in December, about the time Treasury was issuing its latest estimates.
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