Spot iron ore prices have slid to their lowest in a year and are set to post their biggest weekly decline in 15 months. The decline in iron ore prices may worsen as the economy slows in China, the largest importer, as the European debt crisis persists and as Australian miners BHP Billiton (BHP) and Rio Tinto Group increase production, analysts have said. According to Macquarie Group analyst Bonnie Liu in Shanghai, iron ore for immediate delivery may drop to $140/mt by the end of the current year.
Weaker demand for steel in China, the world's biggest consumer and producer, has dragged down steel prices and slashed the appetite for iron ore, the key steelmaking raw material. However, iron ore prices have fallen so steeply and so rapidly in the past two weeks, surprising many market players, that most Chinese mills have opted to delay purchases and wait until prices stabilize.