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The benchmark iron ore price sent to Tianjin Port of China fell 8.3% on the 10th to 104.7 US dollars per ton, setting the second-largest one-day drop in history. At this point, China's imported iron ore prices have fallen by about 22% this year, which also marks the entry of the iron ore market into a bear market.
The collapse in iron ore prices has caused global mining companies to fall. In the London stock market, BHP Billiton shares fell 1.5% to 18.2 pounds per share, Rio Tinto Mining Group shares fell 2.1% to 31.32 pounds per share, while Anglo American, Antofagasta Group and Glencore-Super The company's share price has also fallen more than 2%.
In the Australian stock market, mining companies' share prices fell even more. BHP Billiton shares fell more than 4%, Rio Tinto Mining Group shares fell more than 5.7%, and Fortis Hill Metals Group shares fell nearly 10%.
According to data released on the 8th, China’s exports in February fell sharply by 18.1% year-on-year, which was unexpected. This has become the fuse for the fall in iron ore prices. China's strong exports and government-invested infrastructure are seen as an important factor driving demand for raw materials such as iron ore and copper in recent years. Therefore, mining companies are also more dependent on China to achieve profit growth.
Analysts pointed out that in the context of structural adjustment, China's weak manufacturing industry and continued growth in iron ore port stocks continue to put pressure on iron ore prices. At the same time, the fall in China's steel futures prices will also increase the risk of falling iron ore prices, because iron ore is an important raw material for the production of steel. Iron ore prices may fall further below $100 per ton in the short term.
Goldman Sachs expects iron ore prices to fall to $80 per ton in 2015. Citigroup has also recently lowered its earnings forecasts for BHP Billiton and Rio Tinto this year, and also believes that iron ore prices will fall below $80 per tonne in the next few years.
The decline in Chinese demand has also affected the trend of other commodity prices. Copper futures prices have fallen especially sharply and have now fallen to a seven-month low. China is the world's largest copper importer, and copper is mainly used in electronics production and other manufacturing industries.
Despite the weakness in commodity prices, costs continue to rise, making mining companies more profitable. According to Deloitte's data, the total shareholder returns of global mining companies are significantly lower than those of the medical, banking, real estate and telecommunications industries. The profits of many mining companies have gradually decreased and the debt level has continued to rise.
Some analysts believe that under this background, the integration of the global mining market will accelerate, and some mining companies that lack funds may be more likely to accept M&A proposals. At the same time, the pace of capacity expansion by large mining companies may also slow, as lower iron ore prices will be difficult to support the original capacity expansion plan.
The data shows that in 2013 Australia's three major mines Rio Tinto, BHP Billiton and FM G iron ore production capacity increased by about 100 million tons, and in 2014 will continue to increase 85 million tons to 90 million tons. However, if iron ore prices continue to fall sharply, expanding production capacity will put more pressure on the profitability of mining companies.
China's imported iron ore prices have fallen 22% this year
Abstract Due to factors such as the weak export data released by China on the 8th, China's imported iron ore prices plummeted on the 10th, the biggest one-day drop in four years. This caused the world's largest mining companies to fall sharply on the 10th. Benchmark iron ore quoted to Tianjin Port of China...
Due to factors such as the weak export data released by China on the 8th, China's imported iron ore prices plummeted on the 10th, the biggest one-day drop in four years. This caused the world's largest mining companies to fall sharply on the 10th.