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Iron ore dangerously close to $60 a tonne

Haul truck at an iron ore mine in western Australia. (Image courtesy of BHP.)

Iron ore prices continued their downward trend Tuesday amid ongoing concerns that looming steel production cuts in China on environmental grounds will sap steel mill demand.

Ore with 62% content in the port of Qingdao dropped 2.6% to $61.01 a tonne, according to Metal Bulletin.

The most-traded iron ore on the Dalian Commodity Exchange dropped 2% to 440 yuan per tonne, adding to Monday’s 2.1% decline. Earlier in the session, the contract fell as far as 434.50 yuan, its weakest since July 6.

Benchmark Australian iron ore fines dropped 4.1% Tuesday to a three-month low of $59.1 a tonne, based on data provided by The Steel Index, taking losses since the start of September to more than 20%.

Iron ore dangerously close to $60 a tonne

It means that the January 2017 iron ore contract is now sitting at the lowest level since mid-July. Further falls are predicted to around $50 a tonne by 2019 as China also plans to revoke about a third of its iron ore mining licences, mostly belonging to small polluting operations.

At the same time, supply from Australia — the world’s No. 1 iron ore producer — has risen, further pressuring prices.