The Australian share market has tumbled more than one per cent amid concerns about a continued fall in commodities and a weak lead from Wall Street.
Iron ore prices in China plunged to a fresh six-year low overnight, falling more than 10 per cent to $US44.59 a tonne.
At that price, most Australian miners would be producing at a loss, with the exception of low-cost giants Rio Tinto and BHP Billiton.
Miners have already been under pressure on the stock market: Fortescue Metals slumped more than six per cent on Wednesday, while BHP and Rio each lost more than three per cent.
Iron ore prices hit a low of $US47 a tonne in April this year before recovering to rise above $US64 a tonne in June.
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The slide in iron ore comes as China’s share market remains in freefall, even in the face of the government’s extraordinary efforts to calm investors.
China has suspended trading in more than half of the country’s listed stocks, banned short selling and new listings, and enlisted the help of the major stock brokers through a 120 billion yuan ($A26 billion) stabilisation fund.
But the moves have so far failed to stop the bleeding and the Shanghai Composite Index, which has lost more than 30 per cent in less than a month, dived another 5.9 per cent on Wednesday.
The soft opening on the local market comes after a bruising session for US stocks, with all 30 members of the blue-chip Dow Jones index falling.
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IG Markets chief market strategist Chris Weston said concerns about falling commodity prices, such as iron ore, were a major contributor to anxiety on the Australian market on Thursday.
“Traders are waiting for direction from what happens in China today, while there’s also interest in unemployment figures to be announced”, he said.
Among the iron ore miners, BHP Billiton was down 24 cents, or 0.94 per cent, at $25.19 by 1028 AEST, while Rio Tinto had dumped 63 cents, or 1.26 per cent, to $49.43.
Fortescue Metals Group had lost six cents, or 3.58 per cent, to $1.615.
As for the big four banks, ANZ had shed 47 cents to $31.80, Commonwealth had fallen $1.13 to $84.64, National Australia Bank was down 41 cents to $32.92 and Westpac was 54 cents lower at $32.62.
In company news, Alumina shares lifted half a cent to $1.43 after announcing it received $US71 million in income in the first half of the year.
Meanwhile, Caltex fell 62 cents to $32.75 despite reporting a 45.1 per cent increase in its unaudited first half net profit to $251 million.
