The local mining sector could be in for another horror trading day after the iron ore price fell further overnight as speculation on Chinese markets shows signs of cooling.
Iron ore lost 2.4 per cent to $US61, following its 4.1 per cent slide during the previous session.
Chinese exchanges have moved to crack down on a flood of money betting on price moves, which has been one factor contributing to the commodity’s surprising strength and sharp advances.
The price falls come after Tuesday’s budget which forecast an average iron ore price of $US55 a tonne in financial 2017, well above consensus market outlook.
But the volatility has started to settle, according to miner Fortescue Metals Group, which yesterday moved to take advantage of the bounce in prices and pay down debt. Chief executive Nev Power told reporters he was pleased that Chinese officials had moved to reduce speculative trading.
In London, BHP Billiton shares dropped another 5.8 per cent after the miner was hit with a $58 billion civil suit that also covers its subsidiary Samarco and partner in the Brazilian project Vale.
Rio Tinto shares fell 2.4 per cent, and the falls in the London-listed stock of the two mining giants offer a gloomy lead for morning trade on the ASX.
Other resources stocks in London were also weaker, with Anglo American falling 3.4 per cent and Glencore losing 3.2 per cent, against the backdrop of a 1.2 per cent slide in the broader FTSE 100 index.
Shares in Vale also dropped 5.8 per cent during trade in Brazil.
Source: The Australian