Iron ore price surges
Iron ore is enjoying a positive run, currently at a six-week high, in a bear market that has now lasted close to 18 months.
At the end of Friday’s session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at US$57.00 per tonne, according to numbers from The Steel Index, up 5.6% from its prior close of US$53.80 per tonne.
The commodity has soared 22% from the 10-year low of US$46.70 per tonne it reached earlier in the month and is currently trading at its highest price since 18 March. It hasn’t seen a negative trading session in the last seven and gained 11.1% through last week alone.
The recovery has coincided with a surge in oil prices, with investors seeing both commodities oversold in the wake of collapses that have drawn plenty of headlines over the past six months. A rising crude price increases production costs for iron ore miners and likely increases the price at which the commodity will be forced out of the market, which is why it’s seen as a leading indicator for the iron ore price.
The rebound has also been tied to news of fresh stimulus out of China and hints of production cutbacks as BHP Billiton marginally slows its planned expansion and several smaller miners show signs of distress.
The run has given hope to local miners that the tide may have turned, with the likes of Fortescue Metals, Mt Gibson Iron and BC Iron now likely back operating in the black.
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