Yet another article on B.Day re IO prices! Have copied 1st half below:
'Iron ore prices in meltdown'. Barry FitzGerald October 27, 2011
IRON ore prices have continued to crumble, potentially wiping more than $US10 billion ($A9.6 billion) from annual export earnings should the lower levels be sustained to the end of next year.
Prices for the steel-making raw material have now plunged by $US55 a tonne, or 30 per cent, in the past eight weeks in response to what the Pilbara industry hopes is a temporary slowdown in demand from the world's biggest consumer, China.
The price dump threatens to bring to a halt the rapid growth in mining company profits of the past two years as much as it squeezes federal government revenue expectations from the ''booming'' sector.
Advertisement: Story continues below Treasury does not disclose the commodity price expectations used in the budget process but it is believed to be no different from most forecasters in assuming an iron ore price reduction from a forecast 2011 (calendar) average of $US162 a tonne to a more modest $US150 a tonne for (calendar) 2012.
But $US150 a tonne has quickly become a possible high-side expectation, with iron ore plunging 7.2 per cent to $US128.50 a tonne on Tuesday. Should the lower price level prevail as an average for 2012, there would be a $US10 billion shortfall on a $US150-a-tonne expectation. At the corporate tax rate, that would punch a $US3 billion hole in federal taxes. But the industry remains upbeat that stronger iron ore prices will return, and is eager to remind investors that operating costs of less than $US50 a tonne in the Pilbara mean that even at the lower prices, the margins in iron ore remain fat.
Fortescue Metals chief executive officer Nev Power yesterday added his name to the upbeat list. He said Chinese steel mills were going through a period of destocking that, once completed, should see pricing and demand return'.
