Today, the Sydney Morning Herald reported that the iron ore price has collapsed through the previously believed bottom of US$120/tonne down to US$90.30/tonne with no end to the fall in sight.
Fortescue Metals and Atlas Iron plunged to 3 year lows and RIO below $50 for the first time since 2009 http://bit.ly/NDek8Z .
Interesting tweet by the Wall Street Journal’s James Glynn:
Mining now accounts for 50% of growth in the Australian economy, 70% of exports and has created 75% of the jobs…Is that going pfffffffft! @JamesGlynnWSJ
As someone involved in property, this is very concerning as Australia and especially WA has been called a ‘one trick donkey’ – if mining falters we are in big trouble, and that is exactly what appears to be happening.
Obviously if the commodities prices continue to collapse, mining expansion plans will be scrapped and job losses will occur reducing demand for property.
Interest rate cuts have not had the usual impact on housing demand but prices have been holding up. In areas close to the Perth airport, prices have actually climbed with very low stock levels choking supply and steady demand from FIFO workers.
If mining does take a hammering then now could be the eye of the storm and a great time to get out at inflated prices if you are thinking of selling.