Despite a strong start to the year, iron ore is once again flirting with a five-year low after having fallen another US$1.56 overnight to just US$68.74 a tonne, according to the Metal Bulletin Ltd.
Although data released yesterday showed that China had imported a record level of iron ore in December – taking advantage of the commodity's low price – investors are clearly concerned that these high numbers cannot be sustained. Chinese growth is undoubtedly slowing while at the same time, companies such as Rio Tinto Limited (ASX: RIO) and BHP Billiton Limited (ASX: BHP) are flooding the market with fresh supplies.
Fortescue Metals Group Limited (ASX: FMG) has fallen 3.5% early in the session to trade at $2.46, while Arrium Ltd (ASX: ARI) and BC Iron Limited (ASX: BCI) have also extended their losses, down 3.7% and 4.1% respectively.
By now, it should be clear just how dangerous this sector is. With iron ore tipped to fall even further in 2015, investors ought to look in other sectors for more compelling opportunities.
