Iron ore price crashes through $60

The decline in the price of iron ore accelerated on Thursday with the steelmaking raw material plummeting 4.5% as prospects for China's economy and its steelmaking industry become grimmer.

The 62% Fe benchmark import price including freight and insurance at the port of Tianjin tracked by The SteelIndex lost $2.80 or 4.5% to $59.30 a tonne on Monday.

After almost halving in 2014, the price of iron ore is now down another 20% this year.

On Thursday China’s Premier Li Keqiang told the National People’s Congress downward pressure on the economy was building and set the country’s economic growth target at around 7% the smallest expansion since 1999.

The country will also intensify efforts to cut overcapacity in industries like steelmaking and do more to tackle the "blight" of pollution Li said in his downbeat opening speech at the opening of the country's annual parliament session.

China's steel production, which consume more than two-thirds of the 1.2 billion tonne annual seaborne trade, fell last year for the first time in 30 years as the country's crucial property sector comes under pressure and infrastructure investment slows together with the pace of urbanization.

Beijing's intensifying "war on pollution" could also bring benefits to iron ore exporters, however.

China's mines produce some 350 million – 400 million tonnes a year on a 62% Fe-basis. Around one-third of the many small mines struggling with low iron ore content (average close to 20%) have costs per tonne of more than $100.

The bulk of Chinese fines require a process called sintering (fines are mixed with coking coal and partially smelted) before being fed into blast furnaces, which greatly adds to the steel industry's environmental impact.

China's steelmakers have been substituting domestic supply and reducing the percentage of fines in favour of pellets and so-called "lump" ore from Australia, South Africa and South America which lowers costs and cut pollution by reducing the need for sintering.

Andy Xie, a closely-followed independent economist based in Shanghai, said last month prices could decline to between $30 – $40 a tonne because only then Chinese mines "will be forced to give up."

Thank's to Beijing's tough stance and renewed commitment to enforce environmental laws these miners may now be forced out sooner.