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Iron ore slumped below $80 a tonne for the first time in five years on speculation that China's slowing economic growth will curb demand in the world's biggest user, exacerbating a global surplus.
Ore with 62 per cent content delivered to Qingdao, China, fell 0.5 per cent to $79.69 a dry tonne, the lowest level since September 16, 2009, according to data from Metal Bulletin Ltd. The drop followed seven weeks of declines as the steelmaking raw material had the longest run of losses since May.
The commodity plunged 41 per cent this year as BHP Billiton Ltd and Rio Tinto Group expanded output in a bet that the increase in volumes would more than offset falling prices as higher-cost mines are forced to shut. China's Finance Minister Lou Jiwei said this week growth in Asia's largest economy faces downward pressure. China's economy remained stuck in "low gear" this quarter, with retail and residential real-estate industries struggling, according to the China Beige Book.
"The ramp-up in global supply and downturn in Chinese property sector are driving prices lower," Paul Bloxham, chief Australia economist at HSBC Holdings Plc, said by e-mail on Tuesday. "We expect Chinese miners to cut back production, which should keep prices well above the costs of major Australian producers."
