Chart of the week: iron ore plummets to a decade low

Iron ore, the main ingredient in steel, has suffered a nasty slump. Prices for iron ore delivered to the Chinese port of Qingdao have plummeted below $50 a ton (see chart), the weakest level since the data series began in 2008. Projecting the series further back suggests prices are at a ten-year low.

A rapid recovery is not on the cards. Demand from China has slid as its credit and property bubble have deflated. It would take a major stimulus, as opposed to recent micro-measures, to reverse this trend. Hence global consumption will fall this year, for the first time since 2009, reckons Deutsche Bank.

However, the flood of new supply from major miners such as Rio Tinto and BHP Billiton shows no sign of reversing just yet: they say they want to sell as much as possible for now, and would only start making losses if prices fall to $30 a ton.

Try 6 free issues of MoneyWeek today

Get unparalleled financial insight, analysis and expert opinion you can profit from.

Start your trial

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.