It's been a tough year for iron ore miners. The next two charts say it all…
The price of iron ore in US dollars per tonne, over the past 30 years. Source: Indexmundi.com
Share prices of major Australian iron ore miners. Source: Google Finance
Looking ahead
All major iron ore miners, including BHP Billiton Limited (ASX: BHP), Rio Tinto Limited (ASX: RIO), Fortescue Metals Group Limited (ASX: FMG) and Atlas Iron Limited (ASX: AGO) have endured a tough 2014, as the price of the steelmaking ingredient has fallen from $US135 per tonne to just $US66.84 per tonne. A drop of 50.4%.
Whilst investors might be hoping for a rebound in prices throughout 2015, it's growing increasingly unlikely. In fact, the oversupply situation, which has been largely a result of huge production increases in Australia and Brazil, will get worse before it improves.
In addition, China's unprecedented housing boom is expected to slow in coming years, as it transitions to a more consumer led economy.
Whilst iron ore miners with extremely low cost operations – the Rio's, Vale's and BHP's – are unlikely to go bust under the current price. Miners with high production costs per tonne and/or low quality ore – the BC Iron Limited's (ASX: BCI), Atlas Iron's and Fortescue's of the world – are at serious risk of being unable to breakeven.
As a result, investors would be wise to keep their distance.
