The main reason behind this decline could be due to the sudden decline in the demand of China for steel. The largest and number one exporter of iron ore is highly dependent towards the surplus demand from China.
The iron ore prices have declined low of 81 dollars per ton, which was 135 dollars per ton last year, lowering about 40 percent. The decline in price has also affected the Australian government coffers badly, lowering its tax revenues trying to bring up profit surplus. Australia contributes about 17 percent of world iron ore production.
Mark Pervan, the head of global commodity research stated that the iron ore industry is facing a storm at that moment. Western Desesrt resources and Termite resources, the junior miners, who produces at much higher cost than Rio Tinto and BHP, has already collapsed, the fear of others following the path also affects the economy.
The iron ore giants of Australia, BHP and Rio Tinto, is set to create latest record of the highest production by supplying the global market with million more tons of iron ore. As the property market declines, the demand of iron ore from China also lowers.
Zhejiang Yaang Pipe Industry Co., Limited