Iron ore price slips below $US80
Iron ore prices have fallen below $US80 a tonne for the first time in more than five years amid warnings that it could slip even further.
In another major blow to the State and Federal Budgets, spot iron ore finished at $US79.80. It is now approaching the lows that jolted the iron ore market in 2009 and almost ended some major mining operations.
It was a 2.4 per cent overnight drop, taking the fall this year to almost 45 per cent.
The falling commodity price is hitting other markets.
The Australian dollar went through the US89 cent mark overnight, dropping to 88.7 cents while the ASX has opened lower on the back of falling prices for miners.
Shares in BHP Billiton shares (down by 1.6 per cent), in Fortescue Metals Group (down by 2.8 per cent) and Rio Tinto (down by one per cent) all tumbled in early trade this morning.
The situation could worsen with a key measure of the Chinese economy out later today.
ANZ senior economist Cherelle Murphy said the HSBC flash manufacturing index is tipped to fall below 50 which would suggest manufacturing is contracting in China.
“The pace of momentum is slowing in China, with August industrial production growth at its lowest level since the global financial crisis, with the weak property market weighing on fixed asset investment,” she said.
The concerns about China have also hit bond prices.
Interest rates on Australian debt fell overnight, to 3.6 per cent for 10-year Treasuries, on expectations a slowing Chinese economy will have a knock-on effect to Australia.
All of which will feed into the WA and Federal budgets.
The WA Budget, struck in May, forecast iron ore to average $122.70 a tonne through 2014-15 while the Federal forecaster expected iron ore to average $105 a tonne.
