The eye-popping surge in iron ore prices that underpinned a wave of buying support for the previously unloved iron ore miners is likely to be short-lived, the industry’s senior leaders have warned.
The unprecedented 19 per cent spike in iron ore prices on Monday took the price of Australia’s most valuable export to a level not seen since June last year.
The rally came on the back of increased market expectation that Chinese policymakers will buttress economic growth with a fresh round of stimulus.
Iron ore prices jumped $US9.99 to $US63.74 a tonne. That compares with a low this (calendar) year of $US39.30 a tonne on January 13 and the year-to-date average of $US44.80 a tonne.
The gain represents an annual revenue boost to the Australian industry of more than $US8.25 billion ($11.1bn) — if the higher level is in fact maintained.
But iron ore executives cautioned against seeing the rally as anything more than an aberration.
Speaking on the sidelines of the Global Iron and Steel Forecast conference in Perth yesterday, BHP Billiton’s recently appointed head of Australian mineral operations, Mike Henry, said the company’s views on the long-term outlook for iron ore was unchanged in the wake of the rally.
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