Overnight, the spot iron ore price fell 1.5% to US$61.64, and the ASX iron ore miners are felling it today.
In mid-afternoon trading, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is up 0.3%, and likely heading for its twelfth consecutive day of gains.
But that's no consolation for iron ore miners, particularly junior miners with higher production costs. Today it was the turn of BC Iron Limited (ASX: BCI) and steelmaker-cum iron ore miner Arrium Limited (ASX: ARI), down 5.7% and 4.4% respectively. Atlas Iron Limited (ASX: AGO) is up 1.1% and Mount Gibson Iron Limited (ASX: MGX) is flat, but with their share prices at 19.2 cents and 22 cents, maybe that's their base for now.
Mid-tier miner Fortescue Metals Group Limited (ASX: FMG) is up slightly at 0.8%, trading around $2.53.
While the iron ore price has fallen massively in US dollar terms, the story in the past six months is different. Thanks to the slide in the Aussie dollar from near $1 to around 78 US cents currently, miners like Fortescue and BC Iron are managing to keep their heads above water. They might not be making massive profits, but neither are they likely to be bleeding rivers of red ink either.
We'll have to wait for the companies to report their first half earnings to see the exact situation they are in, but a bigger issue is rearing its head. And that's where the iron ore price is going.
So far, many indicators suggest we could see lower prices for longer, as China's steelmaking comes off the boil, and demand for iron ore falls well below supply. Major iron ore miners Rio Tinto Limited (ASX: RIO) and BHP Billiton Limited (ASX: BHP) are still pushing ahead with increased iron ore production. Rio in particular, believes that China will continue to expand steel production through to 2030.
While the chart below shows the terrible fall in prices over the past year, they can always fall 100% from here.
Source: Google Finance
