A recent dive in iron ore prices spurred by China's slowing economy has dragged down the share price of major Australian miners.
Iron prices have plunged through the USD$120 bottom outlined by mining executives Nev Power of Fortescue Metals and Rio Tinto chief Tom Albanese earlier in the year, sliding to $US88.70 overnight to hit a three year low.
The USD$120 price level is considered by many such as Vale iron ore head Jose Carlos Martins to be the bottom threshold of profitability for miners, with USD$160 serving conversely as a ceiling for the profitability of steelmakers.
Leading Australian iron ore miners have taken in a beating in the past week as a result of iron ore's dive, with Rio Tinto (ASX:RIO) down 5%, Fortescue Metals Group (ASX:FMG) down almost 12%, BHP Billiton (ASX:BHP) down over 4% and Atlas Iron (ASX:AGO) down almost 17% over the past five days as of Friday afternoon.
According to the Australian ANZ analysts in Melbourne indicated following a site tour to China that the Chinese government is subsidizing both steel and iron ore production and that a price rebound may require a wait.
One commentator has recently speculated that China is behind a concerted effort to reduce iron ore prices due to the critical role of steel in the country's modernization push and its heavy dependence upon external suppliers.
The ongoing decline in Fortescue shares has also compelled Fortescue founder and chairman Andrew Forrest to raise his stake in the company by AUD$39 million.