Iron ore plummeted last year as surging global supplies topped demand. It opened 2015 by posting the biggest weekly gain in 18 months amid speculation that China will take more steps to spur growth in the world’s largest user.
Ore with 62 percent content delivered to Qingdao, China, was unchanged today at $71.26 a dry metric ton, following gains in the previous five trading sessions, according to data from Metal Bulletin Ltd. That took this week’s advance to 5.8 percent, the most since the period to July 5, 2013.
The steel-making ingredient tumbled 47 percent in 2014 as BHP Billiton Ltd. (BHP) and Rio Tinto Group expanded low-cost supplies, pushing the market into a surplus just as growth in China slowed. Data from Asia’s largest economy released on Jan. 1 showed that the government’s Purchasing Managers’ Index (CPMINDX) retreated in December to the lowest level in 18 months, adding pressure on policy makers to do more to bolster growth this year. The country buys two-thirds of global seaborne iron ore supply.
“There’s potential for the Chinese economy to be stimulated sometime soon” given the weaker PMI data, James Wilson, a Perth-based analyst at Morgans Financial Ltd., said by phone. “That may lead to more demand for steel products and iron ore. The December-January period is when the Chinese restock traditionally, so there’s some demand from there.”
Hurt by industrial overcapacity, factory-gate deflation and a housing slump, China’s economy probably expanded in 2014 at the slowest pace in more than two decades, according to a Bloomberg survey. To spur growth, the central bank cut interest rates in November for the first time since 2012.
Shares Climb
Producers’ shares climbed in Australia before the price from Metal Bulletin. Rio rose 0.6 percent to A$58.33, the highest close since Dec. 4, while Fortescue Metals Group Ltd. rallied 3.3 percent to the highest since November. Atlas Iron Ltd. (AGO), which lost 86 percent last year as iron ore plunged, gained 39 percent, prompting a query from the exchange.
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