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Iron ore prices in China have given up all the gains added on since Donald Trump was elected US president.
Prices are around their lowest in five months following a forecast published last week predicting the steel-making ingredient could fall to $65 a tonne by the end of this year.
The futures contract price for one tonne of iron ore on the Dalian Commodity Exchange dropped as much as 2.3 per cent to Rmb522.5 ($75.64) on Monday, following on from Friday’s close down 5.4 per cent and again reaching the lowest level since November 9, the day of the US presidential election.
The second day on a downward trajectory for iron ore followed a new quarterly report from Australia’s Department of Industry, Innovation and Science predicting average prices in China would fall to $65 a tonne this year before ultimately declining further to $51, “weighed down by the combined impact of ongoing growth in low-cost supply and soft demand.”
The department noted on Friday that while iron ore port stocks had reached the highest level on record in recent quarters, anecdotal evidence suggested that much of that was comprised of low-grade iron ore, whereas demand is currently highest for higher-grade ore.
But it added, “the supply of high grade iron ore should increase and persistently high rising stocks will eventually place downward pressure on the price.”