Iron ore prices have slumped to a fresh five-year low, sending Fortescue Metals Group shares to a new low and the value of the stocks owned by its founder, Andrew Forrest, below $2 billion.
Iron dipped below $65 a ton for the first time since 2009 as investors fret about an oversupply and analysts continue to downgrade their forecasts for the commodity, Business Review reported.
Fortescue and Arrium led shares lower this morning, each dropping 7 percent. BHP was off 2.2 percent and Rio was off 1.7 percent.
Fortescue shares were down 14.5cents at $1.99 after earlier touching a five-year low of $1.92. At Tuesday’s low, Forrest’s shares in Fortescue are worth $1.99b, having lost more than $3b of value in the past six months.
At the end of the latest offshore session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $63.30 a ton, down 3.9 percent from its previous close of $65.90 a ton.
Lowest Point
The price is now well below the five-year low reached on December 23 of $65.70 a ton, leaving the commodity at its lowest point since the middle of 2009.
Iron ore has endured a rough start to 2015 after a horror 2014 that saw almost 50 percent wiped from its value. It has already lost over 10 percent since January 1, with a brief rally above $71 a ton appearing little more than a dead cat bounce.
The latest decline was its worst percentage loss for the year by a considerable margin and extended its losing streak to six consecutive sessions.
The commodity has risen just once in the past 14 trading days as investors eye softer demand from China ahead of the Lunar New Year in February.
In previous years iron ore has risen in the last quarter of the year as Chinese steel mills stocked up ahead of Chinese New Year, but that did not eventuate in 2014, creating a risk of further weakness in coming weeks.
Adding to the downbeat outlook is consistent downward revisions to price forecasts from leading investment banks, with Goldman Sachs following Citi, Macquarie and UBS in slashing its expectations.
According to Goldman, iron ore will likely average $66 a ton this year, a sharp cut to its previous forecast of $80 a ton. The commodity is then expected to extend falls in 2016, sinking to an average price of $61 a ton as an oversupply continues to drag on the market.
CAPTION
Iron dipped below $65 a ton for the first time since 2009.
