The price of iron ore dropped by 4.65% yesterday (1 October), marking its lowest level in the past year, according to Trading Economics.
Iron ore is currently trading at US$92.10 ($133), representing a 5.19% weekly fall and a 14.03% decrease for the year to date.
Earlier in the week, the Shanghai Metals Market (SMM) reported the iron ore decline to be a reflection of restocking demand largely running its course as mill losses are yet to improve and most are holding output at recent levels.
The SMM indicates that iron ore prices lack support in the near future and are likely to “stay soft”.
As reported by Mining.com.au, the China Iron and Steel Association has urged mills to restrain output — a call that is not mandatory but likely to curb feedstock demand.
With Australia being the world’s largest iron ore producer and exporter, the country is likely to take a hit from the falling prices.
This trend will significantly reduce Australia’s export earnings, as well as government revenues in the coming years, as iron ore exports generate more than $137 billion each year for the country.
Earlier this year, the Institute for Energy Economics and Financial Analysis reflected that while Australian iron ore miners may be the last to fall from this fierce cost competition, this may provide a new opportunity for green iron.
With China unveiling its five-year plan to place a greater emphasis on the role of green hydrogen in decarbonisation, the focus is likely to be on companies moving closer to production, such as Hawsons Iron (ASX:HIO).
At its namesake project near Broken Hill in New South Wales, Hawsons Iron hosts 4.4 billion tonnes (Bt) of magnetite in resources and 2.3Bt in reserves.
The company is conducting early works and a Feasibility Study at the asset, after completing a Prefeasibility Study last December.
The Hawsons Iron Project will deliver ‘high-grade’ magnetite concentrate through dry-processing. The company is aiming to position itself as “a global leader in the green steel revolution”.
Magnetite concentrate from the project is expected to be largely insulated from the typical iron ore market price fluctuations due to its purity levels and consistency, Hawsons Iron says.
Write to Maddison Elliott at Mining.com.au
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