While there are hopes that the price drop will reduce supply from marginal producers, particularly in China, Mr Cutifani cautioned this could take a while to impact the market. "What I've found in this industry is that a lot of capacity can be really sticky," he said. "My concern is the downside [to prices will be] more and longer than you anticipate.
Investors were also struck by comments from the head of mining giant Anglo American, Mark Cutifani, who warned the retreat could have further to run. "There is a lot of [iron ore] supply coming on and it will impact profits — and so I'm concerned," he said this week.
Such good fortune is not shared by the rest of the local industry as Atlas Iron has a breakeven price in the low $US80 range, while Fortescue Metals Group and BC Iron have breakevens of around $US70 a tonne, according to recent UBS analysis.
The latest drop came after a widely-quoted research note this week from respected CLSA analyst Ian Roper, who forecast a $US75 a tonne price in the back half of next year.
Read more here: Business Spectator