Photo by: Bloomberg
PERTH (miningweekly.com) – The continued decrease of most commodity prices, apart from uranium and silver, during the month of September has caused advisory firm Deloitte’s Western Australia (WA) Index to fall during the quarter, with the market capitalisation of Western Australia-listed companies decreasing by 6.9%, to close the month at A$143.5-billion.
Iron-ore prices remained under significant pressure, continuing their downward movement as a result of ongoing concerns around the long-term health of the Chinese economy, Deloitte said.
This was evidenced by lower demand in the property/construction sector, combined with increases in iron-ore supply from major producers such as Australia and Brazil.
“The continued decrease in the ore price is placing significant pressure on producers at both ends of the market,” said Deloitte Western Australia clients and markets partner Tim Richards.
“Major producers are looking to increase production as a result of the significant investments in expansion projects; however, this is putting continued pressure on prices as a result of demand concerns, resulting in many smaller projects being marginal at best.”
Richards noted that the iron-ore price decreased by 11.8% during September, to close at $78.50/t – a new five-year low. The fall was mainly driven by the increase in supply from major global exporters, including Rio Tinto, BHP Billiton, Fortescue and Brazil’s Vale.
The price fall was further intensified by weakness in the Chinese property market and steel sector.
Meanwhile, uranium maintained its position as the best commodity performer, increasing 17.7% in September, driven by disruption to global supplies caused by US and European Union sanctions against Russia because of its ongoing conflict with Ukraine. Added to this was Japan’s plan to restart its nuclear programme and China’s ongoing nuclear plant construction programme.
Deloitte reported that the performance of the local equity market weakened during the month, with the Deloitte WA Index posting losses of 6.9%.