Australia’s financial health at severe risk as iron ore tumbles below $US90 a tonne

[Pelican Press 0]

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Australia’s financial health at severe risk as iron ore tumbles below $US90 a tonne

Australia’s key mineral commodity has fallen to levels not seen since 2022, which is set to punch a ***** in the Federal Budget.

The iron ore spot price dropped to $US89.85 a tonne on Monday, the first time it has been below $US90/t since November 2022 and marking a $US46.42/t decline since the start of this year.

Since hitting peaks of $US233/t in May 2021 the value of iron ore has dipped below $US100/t seven times, but has typically rebounded before reaching the $US90/t threshold.

The vast majority of Australia’s iron ore comes from WA’s Pilbara region and is used in China’s steel mills.

Last month ******** steelmaking giant Baowu warned of a “severe winter” for China’s steelmakers as a domestic property bubble bursts.

A survey from ******** reporting agency Mysteel highlighted that only 1.3 per cent of the country’s steelmakers are currently profitable, an unprecedented number.

The value of new-home sales from the 100 biggest real estate companies fell about 26.8 per cent from a year earlier to 251 billion yuan ($US35.4 billion) for August, faster than the 19.7 per cent decline in July, according to preliminary data from China Real Estate Information Corp.

Many analysts remain pessimistic on the chances for a sustained price rebound, including broker Citi which expects prices to drop to $US85/t in the near term and potentially weaken further.

Last month Federal Treasury warned that China’s plummeting demand for iron ore will cost Australia more than $3 billion over the next four years.

“Softness in the ******** economy and the recent fall in iron ore prices are another reminder that we are not immune from volatility and uncertainty in the global economy,” Treasurer Jim Chalmers said at the time.

“This is exactly why we take such a cautious and ************* approach to Treasury’s forecasts for resource prices and revenue.”

Prices are now below Federal Treasury’s forecasts.

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