Normally markets would be wetting themselves at a 20% slump in the price of a key commodity like iron ore, and yet nothing has happened — the headless chooks in the media haven’t appeared emulating Henny Penny, crying “the sky is falling”. Instead some very funny people in Canberra have been claiming the government will have an extra $4 billion to play with in the May budget. But that won’t be happening if iron ore continues its latest slide. Ore with 62% content in northern China fell 1% to US$74.71 a dry tonne on Monday, according to Metal Bulletin Ltd. That was after a 6.8% fall on Friday, which pushed the commodity into a bear market from a February peak of more than US$94 a tonne. Iron ore futures in Dalian in China fell to their lowest since November on Monday, and those in Singapore traded below US$72 a tonne.

The shares of the biggest miners have been hardly ruffled by the side. BHP Billiton shares — targeted by US hedge fund investor Elliott Management — rose 4.6% on the ASX on Monday, while Rio Tinto shares were up 1.1%. Fortescue Metals Group shares were all but unchanged yesterday.

Peter Fray

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