The drop in demand for the key steelmaking ingredient continues that a major Australian exporter of iron ore further lowered this week its price of the commodity, while on miner went into administration.
Mining giant Rio Tinto (ASX: RIO) informed two customers on Tuesday that it would discount its low-grade iron ore by 13 per cent from 6 per cent beginning July 1, effectively dropping the price of iron ore to $73 per tonne from the already low price of $89, reports the Herald Sun.
Besides Rio, Fortescue Metals Group (ASX: FMG) has also cut the price of its low-grade iron ore because of the weak demand from China.
Tim Murray, managing partner of J Capital Research, explained the plummeting price of low-grade iron ore to the supply-demand imbalance, causing the price of iron ore to go down 30 per cent from January prices.
The situation has caused Termite Resources, the miner that operates the Cairn Hill iron ore project in South Australia, to be placed in administration. The company is 51 per cent owned by IMX Resources, an ASX-listed company.
Martin Lewis of Ferrier Hodgson is the appointed administrator of Termite. I
According to IMX, Termite is responsible for all contractual obligations for the Cairn Hills project, except for a guarantee it provided under a port handling services deal with Flinders Port.
IMX said the development would have no effect on the ongoing exploration programme at the Ntaka Hill nickel exploration project and the Kishugu gold prospect in Tanzania.
Iron ore prices reached a peak of $135/tonne in 2013.