Iron ore prices have hit their lowest level in two years as China’s stricken property sector depresses steel demand, threatening to squeeze earnings at the world’s largest mining houses. Prices for the key steelmaking ingredient have plunged by more than a third since the start of the year, cumulatively wiping off about $100bn in market capitalisation of the “big four” iron ore miners — BHP, Rio Tinto, Vale and Fortescue. Iron ore for delivery to Qingdao has slipped to $92.
Shipments from Australia and Brazil have started to slow, with July data pointing to a sharp decline. “Iron ore is such a well structured industry,” said Bob Brackett, mining analyst at Bernstein. “The big global miners control their own supply chains. In the same way Opec won’t flood the market , they will simply slow down a bit if the market doesn’t want their tonnes.