The world’s largest iron ore miner, Rio Tinto, has followed Fortescue Metals Group in discounting the price of its low-grade iron ore amid soft demand, The Australian Financial Review reports.
The paper reports that Rio told customers on Tuesday night the discount for its low-grade product would be lifted from 6 per cent to 13 per cent from July 1, leaving it to receive about $US73 a tonne.
The news follows a similar discounting move by Fortescue earlier in the week, with its low-grade discount reportedly lifting to 14 per cent from July.
“Demand for low quality product is plummeting,” Tim Murray, managing partner of J Capital Research, told the AFR, noting that demand has been falling at the same time supply has been rising.
The supply-demand imbalance has been the key reason why iron ore prices have slumped over 30 per cent this year. Currently, the price is hovering around $US90 a tonne, its lowest levels since September 2012.
Overnight the iron ore price lifted back above $US90 a tonne, after dropping below the key threshold for the first time in almost two years earlier this week.
Benchmark iron ore for immediate delivery to the port of Tianjin in China is trading at $US90.30 a tonne, an increase on from $US89.30 in the previous session.
Source: The Australian
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