2014.11.2605:22:13UTC+00Iron ore glut leads to first drop below $70 since 2009

Prices of iron ore traded below the $70 level for the first time since 2009 with producers around the world raising their low cost supply to deepen a global glut despite an economic slowdown in its largest user, China.

Ore with 62% content delivered to Qingdao declined by 1.2% today for a price per dry metric ton of $69.58, the lowest since June 2009, based on data from the Metal Bulletin Ltd. The raw material is on track to post a 13% fall this month, its largest loss since May.

Iron ore has fallen by 48% so far this year with three of the largest miners in the world including BHP Billiton, Rio Tinto Group, and Vale SA expanding their output. Last week, the central bank of China surprised markets by slashing its interest rates in order to boost its economy up from its slowest pace of economic expansion in over two decades.

BHP’s chief executive, Andrew Mackenzie, said last November 20th that the current prices were what they expected in the long term and added that the company is still able to run an acceptable amount of business.

Goldman Sachs Group Inc. claims that the global market for seaborne ore will have a surplus of 110 million tons to absorb in 2015, nearly double the amount this year.