The iron ore price has begun its slow descent back to ‘normal’ – by Tess Ingram and Lisa Murray (Australian Financial Review – March 23, 2017)

The iron ore price will fall but it won’t drop off a cliff. That’s the view of analysts who are predicting a drawn-out decline for the price of Australia’s most important commodity, rather than a “sharp crunch down”.

The spot price of iron ore fell 3 per cent in China on Wednesday to $US84.99 per tonne, taking the fall over the past two days to 7.7 per cent. Moves by Chinese regulators to cut property speculation are weighing on the prices of Chinese construction steel and iron ore prices.

While the price has held up surprisingly well in 2017, beating the expectations of most analysts, it has slid consistently since March 16 and is about $US10 per tonne lower than the peak of $US94.86 per tonne on February 21.

CBA commodities analyst Vivek Dhar said the slump marks the beginning of a gradual price decline, which he expects to settle at $US60 per tonne by the end of December.

“I think this is the beginning of a return to $US60 a tonne, but that is still some time away,” Mr Dhar said. “I think demand will be healthy enough to keep the price supported, so I don’t expect a huge drop and I think China would want stability in its markets given this election period coming up.

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