The iron ore price continues to drift lower, moving closer to a five-year low as fears of an oversupply remain at the forefront of investors' minds.
Benchmark iron ore for immediate delivery to the port of Tianjin in China is currently trading at $US88.20 a tonne, down more than half a per cent from its $US88.90 closing mark in the previous session.
The commodity has lost over 35 per cent this year, with its most recent descent now extending to eight days and forcing its price to levels last seen in September, 2012.
Back then the price fell as low as $US86.70 a tonne on September 5 and should the recent falls lead to prices underneath that trough, it would represent a five-year low for the commodity as the $US86 mark has not be breached since October, 2009.
The falls have largely been triggered by production expansion from the world's top iron ore producers -- including Rio Tinto, BHP Billiton and Brazil's Vale -- at a time when Chinese demand has been called into question.
While the price of the commodity is crucial to the profitability of these mining giants, their market-leading cost structure allows them to absorb the price falls much more easily than junior miners, who are left feeling the squeeze and are potentially vulnerable to lowball takeover bids.
The most recent pricing weakness has followed comments from BHP chief executive Andrew Mackenzie, who last week cautioned investors not to expect the price of the commodity to rise significantly anytime soon.
"We would say it is quite unlikely that we would see prices north of $US100 a tonne, so our forecasts are obviously based on something below that," Mr Mackenzie said regarding the firm's move to lift supply.
SourceL: The Australian
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