Sky News Business Reporter Ed Boyd says there’s “bad news for the federal budget” as the iron ore price has fallen again overnight and is now at its lowest level in 18 months.

“Also, pretty bad news for Western Australia’s projected budget surplus next year,” Mr Boyd said.

Mr Boyd said overnight, the iron ore price fell about five per cent and is now at about US$87 per tonne.

“The big reason for the fall has been China basically crippling its own steel industry, they’ve told steel mills ‘you need to stop production’ because steel uses a lot of coal, and it creates a lot of pollution.

“The theory is that once the Winter Olympics are finished, some of these steel mills are going to start producing a lot more steel again and use more iron ore and there’s a theory that the price could start to rise early next year.”

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