Why the iron ore price is falling in one picture

Iron ore set to follow gold down, down

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Iron ore fell to US%96.80 a tonne overnight – its lowest level since September 2012 – and reviving bad memories of the fall to US$86.70 a tonne at that time.

It's a long way from recent highs of US$130 to US$140 a tonne around the end of last year, and the main reason why Australia's iron ore miners Rio Tinto Limited (ASX: RIO), Fortescue Metals Group Limited (ASX: FMG), Mount Gibson Iron Limited (ASX: MGX) and Atlas Iron Limited (ASX: AGO) have seen their shares fall 11.6%, 21.4%, 23.4% and 36.4% respectively.

The issue is rising supply and falling steel demand.  BHP Billiton Limited (ASX: BHP) is upping production to 270 million tonnes per annum, while Rio is ahead of schedule to reach 290 million tonnes in the short-term, and is targeting 360 million tonnes over the longer-term. Brazilian giant Vale plans to lift production to more than 400 million tonnes from its current 300 million per annum.

And that's just some of the new supply. Gina Rinehart's Roy Hill mine could add an additional 55 million tonnes, Rio's Simandou project may add 95 million tonnes each year when operational.

So, without further ado, here's the chart of the iron ore price, versus stockpiled ore at China's ports.

falling iron ore price

Source: Fairfax Media

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »