The price of iron ore has surged higher still, reaching its highest level since mid-2014, and flirting with the $US100 a tonne mark. A pick up in steel futures has sent Australia’s largest export soaring 21 per cent so far this year, and up 84 per cent in the last twelve months.
Iron ore, with a ferrous content of 62 per cent was fetching $US94.86 a tonne on Wednesday morning. China’s Dalian Commodity Exchange, most-active futures surged as much as 30 per cent this year to 723yuan ($136).
Consolidation in the Chinese steel industry, which iron ore fuels, has seen steel exports are slump 5 per cent month on month and down 24 per cent year on year, while iron ore imports are up 12 per cent year on year.
“This suggests that short-term demand for steel remains robust,” said Grant Sporre, research analyst at Deutsche Bank.
Iron ore’s spectacular rally in 2016 was thanks to added stimulus in China, which supported steel production and perplexed iron ore bears who had pointed to additional low-cost output and concerns the world’s second largest economy wouldn’t be able to absorb the supply.
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