Iron ore price crashes 4%

Iron ore price crashes 4%After trading sideways since the start of November the slide in the iron ore price resumed on Tuesday

The CFR 62% Fe 2% Al benchmark import price at the port of Qingdao tracked by The SteelIndex plunged 4.1% to $73.20 a tonne on Tuesday, down $3.10 on the day.

The price of iron ore is now down 46% in 2014. The steelmaking raw material last traded at these levels in June 2009 when annual benchmark pricing between the Big 3 producers – Vale, BHP Billiton and Rio Tinto – and Chinese and Japanese mills were still the industry norm.

Today's gap down has been blamed on the latest property market data from China and fresh falls in the domestic steel price.

China is responsible for more than two-thirds of the world's iron ore consumption and forges almost as much steel as the rest of the world combined.

Residential property prices fell 2.5% in October compared to the same time last year, the sixth month in a row of declines. Sales volume declined 1.3% during the month.

China's property sector which has enjoyed years of red-hot growth, is a key component of its economy and also accounts for 47% of all steel demand, three times that of infrastructure.

The globe's most active steel future – Shanghai rebar – dropped 2% on Tuesday, coming close record lows of Rmb2,460 ($401) per tonne reached last week.

Reuters quotes Cao Bo, an analyst at Jinrui Futures in Shenzhen as saying there is more pain ahead:

"The real estate industry is a major risk to China's economy and investment in the sector has been slowing down in the past six months and this will continue in the next six months or more."

The property sector is also dragging down overall economic growth in the world's second largest economy with Q3 GDP at 7.3% year on year, the lowest since the financial crisis.