The value of iron ore companies in Australia is taking a hit with predictions the price of the commodity will slump in the second half of the year.
A prominent Chinese economist has forecast iron ore prices will fall to $60 US a tonne, a drop of more than half its current value.
The comments come after the Chinese government announced plans at the weekend to curb investment in property, which would have a direct impact on steel production and therefore iron ore demand.
Rio Tinto's chief economist also signalled the company was expecting a fall, telling investors China's expansion would slow in the second half of the year
BIS Shrapnel's Adrian Hart says while he believes prices will fall, he has a more conservative view and thinks they will remain above $100 US a tonne.
"There's certainly scope for iron ore prices to come back from what seems to be a unsustainably high level," he said.
"The current price is being supported by a strong demand from Chinese mills as they are restocking but that process won't last forever."
Mr Hart says some high cost iron ore operations could be put at risk if prices for the commodity slump.
He says high cost miners will hold on during this forecast slump but could be challenged toward the end of 2015, when iron ore exports from Western Australia increase.
"Higher marginal cost operations that could not necessarily be profitable with iron ore prices below $100 US a tonne, that could put some operations at risk, but for most of Australian operations it will just mean a crimping of margins," he said.
Company values have dropped over the past two weeks.
Rio Tinto has plunged 11 per cent while the more diverse BHP Billiton has fallen 8 per cent.
The story is worse for the smaller producers, with Fortescue Metals Group sliding 18 per cent, Mount Gibson 24 per cent and Atlas Iron 27 per cent.
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