SYDNEY—One of this year’s hottest commodities is flaming out.
The price of iron ore has fallen roughly 40% since mid-July on concerns about demand from China, which makes more than half of the world’s steel. The downturn has dealt a blow to producing countries, notably Australia and Brazil, that are battling to protect fragile economic recoveries from outbreaks of the highly contagious Delta variant of the coronavirus.
The benchmark price fell as low as $130.20 a metric ton on Thursday following a 15% single-day nosedive to its lowest value since November 2020, according to S&P Global Platts, which publishes daily prices. The commodity, which hit a record above $233 a ton as recently as May, bounced slightly to $139.10 a ton on Friday.
Other commodities including oil and copper have been falling on worries that rising Covid-19 cases might hobble the global recovery, but not at such a rapid pace. Iron ore hasn’t fallen this far this fast since spot prices were established for the commodity roughly 13 years ago, Morgan Stanley said.
Iron ore’s swift retreat signals an end to the bloated margins that have propelled miners’ earnings and dividends to records. Investors typically bet on iron ore via stocks of the companies that produce it.
