The benchmark S&P/ASX200 index closed 0.76 per cent lower at 7403.7 while the All Ordinaries Index fell 0.73 per cent to 7702.9.
“Today’s losses can be almost solely blamed on the iron ore miners, which are coming under a lot of pressure, and this is after the iron ore price fell by around 6 per cent in the past day to $US106 per tonne,” CommSec analyst Steve Daghlian said.
“It’s a far cry from the $US233 per tonne high hit in the middle of May.
“We’ve actually seen iron ore prices fall by about $US126 or 54 per cent from those levels.”
Major investment bank UBS predicts the price will fall below $US100/t by the end of this calendar year and average $US89 per tonne in 2022 as supply exceeds demand.
It has downgraded its rating for Fortescue to sell, from neutral, sending the miner’s shares plunging 11.48 per cent to a 14-month low of $15.27.
UBS maintained its respective sell and neutral ratings on Rio Tinto and BHP.
Rio Tinto shares dropped 4.7 per cent to $98.80 - falling below $100 for the first time since November - while BHP slid 3.67 per cent to $39.16, a level last seen in December.
“Keep in mind that iron ore prices did more than double over a 12-month period just up until recently, so that was a reason why some of these miners have been hitting record (share price) highs and also posting stronger profits and record dividends as well,” Mr Daghlian said.
“It also doesn’t cost them very much to dig up iron ore ... on average the unit cost for digging up each tonne for BHP, Rio and Fortescue is still below $US20 per tonne at the moment.”
