Falling iron ore prices caused by China ‘side-intervention’ in the market

The Motley Fool’s Scott Phillips has suggested China’s short-term market intervention resulting in lower iron ore prices is hiding the Asian superpower's bid to find a longer-term solution.

It comes as the price of iron ore dropped from a high of $230 US dollars per tonne to $180 US dollars per tonne.

Mr Phillips told Sky News while $230 US dollars per tonne was unsustainably high he was concerned about the speed of the price drop.

“It fell five per cent on Friday at overnight trade in the US and another five per cent overnight our time literally yesterday,” he said.

“It really is a question of how far, how fast.

“This of course is a demand side intervention by China’s government basically banning people … to say if you are hoarding anything in the space of … raw materials we want you to get it out.”

Mr Phillips said the move was a “big watch out” call for Australia given China’s pattern of slapping trade tariffs on exports.

“They want to basically use that excess hoarding supply to drive the prices down in the short term while they look around for alternatives,” he said.

“At some point if they manage to impact supply or alternatives that really could be more bad news for Australia’s iron ore industry and of course for the federal budget.”

Видео Falling iron ore prices caused by China ‘side-intervention’ in the market канала Sky News Australia