AFP, Sydney :
Iron ore prices plunged to six-year lows Thursday as contagion from China’s stocks rout hurt commodity markets, with resource-heavy economies like Australia and Brazil bearing the brunt.
The spot price of the commodity took its biggest one-day hit ever overnight, falling 10 percent to $44.59 a tonne, analysts said, as demand in key market China continues to shrink.
The price represented its lowest level since at least May 2009.
At that level, most Australian miners would be producing at a loss, with the exception of low-cost giants like Rio Tinto and BHP Billiton.
“You’ve had the perfect storm in terms of globally rising risk premiums and at the same time expectations of China’s (economic) recovery are being pushed out,” CLSA’s head of resources research Andrew Driscoll told AFP.
“It means all commodity markets have faced heavy selling, but particularly those markets where there’s no shortage of supply and iron ore is a good example of that.”
IG Markets strategist Evan Lucas added in a note that the price of steel-of which iron ore is a key ingredient-in China was so weak it was “now cheaper per tonne than cabbage”.
Copper jumped as the US dollar slipped, and oil prices were also on the rise, with US benchmark West Texas Intermediate gaining 83 cents to $52.48 a barrel on Thursday, after four days of losses.
Various agricultural commodities, including wheat, soybeans and corn, rose Thursday, boosted by a surge in China’s benchmark Shanghai stock index after the government issued more policies to halt the market slide.
Cotton declined, but analysts said the drop was due to an announcement in China-the world’s largest commodity consumer-that it would sell two metric tonnes from state reserves in July and August, rather than concerns of broader economic weakness.
The slump in iron ore followed the free fall in China’s stock market this week even as Beijing worked hard to calm investors.
China has suspended trading in more than half of the country’s listed stocks, banned new listings, is probing “vicious short-selling” and enlisted the help of the country’s major stockbrokers through a huge stabilisation fund.
ANZ analysts also linked the commodity pressure to the Chinese market, and noted that “while there are some signs of prices stabilising, any sustained recovery in commodity markets is unlikely in the short term”.
Iron ore prices plunged to six-year lows Thursday as contagion from China’s stocks rout hurt commodity markets, with resource-heavy economies like Australia and Brazil bearing the brunt.
The spot price of the commodity took its biggest one-day hit ever overnight, falling 10 percent to $44.59 a tonne, analysts said, as demand in key market China continues to shrink.
The price represented its lowest level since at least May 2009.
At that level, most Australian miners would be producing at a loss, with the exception of low-cost giants like Rio Tinto and BHP Billiton.
“You’ve had the perfect storm in terms of globally rising risk premiums and at the same time expectations of China’s (economic) recovery are being pushed out,” CLSA’s head of resources research Andrew Driscoll told AFP.
“It means all commodity markets have faced heavy selling, but particularly those markets where there’s no shortage of supply and iron ore is a good example of that.”
IG Markets strategist Evan Lucas added in a note that the price of steel-of which iron ore is a key ingredient-in China was so weak it was “now cheaper per tonne than cabbage”.
Copper jumped as the US dollar slipped, and oil prices were also on the rise, with US benchmark West Texas Intermediate gaining 83 cents to $52.48 a barrel on Thursday, after four days of losses.
Various agricultural commodities, including wheat, soybeans and corn, rose Thursday, boosted by a surge in China’s benchmark Shanghai stock index after the government issued more policies to halt the market slide.
Cotton declined, but analysts said the drop was due to an announcement in China-the world’s largest commodity consumer-that it would sell two metric tonnes from state reserves in July and August, rather than concerns of broader economic weakness.
The slump in iron ore followed the free fall in China’s stock market this week even as Beijing worked hard to calm investors.
China has suspended trading in more than half of the country’s listed stocks, banned new listings, is probing “vicious short-selling” and enlisted the help of the country’s major stockbrokers through a huge stabilisation fund.
ANZ analysts also linked the commodity pressure to the Chinese market, and noted that “while there are some signs of prices stabilising, any sustained recovery in commodity markets is unlikely in the short term”.
