Australia’s biggest export earner, iron ore, continues to defy the weight of opinion that its price should buckle in the face of rising supply and slowing Chinese steel production.
Instead of prices retreating to the call of the pundits for $US45 a tonne, iron ore has steadily risen to 10-week highs of $US58.80, with trade in Asia yesterday suggesting prices of $US60 a tonne-plus could be on the cards.
The rally has pulled the share prices of diversified producers Rio Tinto and BHP Billiton to 10-week highs, and the price of the pure-iron ore play Fortescue to a near two-year high, the latter helped by its 2016 financial-year output being close to 5 million tonnes more than its guidance.
The bounce drove local shares, helping the Australian market deliver five positive sessions in a row with some 3.7 per cent — or about $57 billion — in value added over the past week.
The benchmark S&P/ASX 200 closed 0.7 per cent higher at 5388.5 points yesterday, within reach of its highest level for 2016.
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