Iron ore has rapidly fallen into a bear market as worries about a trade war between the US and China add to concerns about expanding supply and cutbacks in China’s steel industry.
Prices have dropped by nearly one fifth since the start of March with benchmark prices sliding to around $US62 a tonne amid record stockpiles at Chinese ports.
The Federal Government predicts the price of Australia’s biggest export could fall 20 per cent from 2017 to an average price of $51.50 a tonne in 2018 because of slowing demand in China as Beijing clamps down on steel production to curb pollution.
That is lower than other forecasts in the market by international banks. UBS thinks prices will average $US67 a tonne this year and ANZ has forecast an average price of $US69 for 2018.