The iron ore price was crushed overnight, falling 6.7% (US$3.67) to US$51.22 a tonne, as port inventories of the commodity zoomed above 100 million tonnes.
Australia's ASX-listed iron ore miners could be hit hard today, particularly the smaller and medium producers – who tend to have higher production costs and are therefore much more susceptible to dramatic price movements.
Those who could be hit include Atlas Iron Limited (ASX: AGO), BC Iron Limited (ASX: BCI), Fortescue Metals Group Limited (ASX: FMG), Gindalbie Metals Ltd (ASX: GBG), Grange Resources Limited (ASX: GRR), Mineral Resources Limited (ASX: MIN), as well as the two largest ASX miners Rio Tinto Limited (ASX: RIO) and BHP Billiton Limited (ASX: BHP).
BHP reported last year that a US$1 decline in the iron ore price would impact its 2015 financial year profit after tax by US$144 million. In other words, BHP has lost roughly US$528 million in after tax profit overnight.
The commodity has now lost 27% of its value since peaking above US$70 a tonne on April 21 as stockpiles have soared, and as Chinese authorities clamped down on speculative trading in futures on several exchanges.
But port inventories are expected to continue increasing, piling further downward pressure on the spot iron ore price, as we wrote yesterday.
