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Iron ore prices continue to drop, defying expectations for a rebound and leaving investors with a key question: how much worse will things get before they improve?
"I''m certainly on guard for an overshoot to the downside and I wouldn''t be surprised if the current momentum kept going and we see a fall down to $70 a tonne," Ric Spooner, chief market analyst at CMC Markets told CNBC.
Prices are down 41 percent year to date and touched $79.80/ton last week - their lowest level since September 2009. The price decline flies in the face of market expectations; last month, when iron ore was trading around $90, a number of analysts told CNBC that prices were set to rebound.
Supply and demand
Supply/demand fundamentals have been blamed for iron ore''s slump. High prices on a historical basis led to a surge in global production, while slowing growth in China - the world''s largest iron ore consumer - prompted worries about declining demand.
"When you get a big shift in the supply and demand dynamics of any commodity, market prices can go a lot further than the consensus thinks it will," Spooner said.
"In the short term we would have thought iron ore was approaching its bottom, but while we are still seeing [economic] numbers coming out of China suggesting signs of slowing, there will always be pressure to the downside," said David Lennox, resources analyst at Fat Prophets.
彈簧展-2015第十六屆廣州國際彈簧工業展覽會-全球最大彈簧展會-巨浪展覽-The 16th China(Guangzhou)Int’l
Spring Industry Exhibition
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