Iron ore has rallied back into a bull market. Prices are surging as China’s crackdown on steel output this winter runs down inventories, helping mills’ profitability and stoking demand for high-grade ore even as investors discount signs of ample supply.
Spot ore with 62 percent iron content jumped 3.7 percent to $72.68 a metric ton, the highest since Sept. 14, according to Metal Bulletin Ltd. That’s more than 20 percent up from the low hit in late October, meeting the common bull-market definition. Earlier, on Monday, futures in Asia rallied, with the SGX AsiaClear prices rising 2.9 percent to $71.29 a ton.
Iron ore’s gains — which will aid miners including Rio Tinto Group, BHP Billiton Ltd. and Vale SA — are buttressed by China’s unprecedented push to rein in steel output this winter to cut pollution.
While that initiative may result in less steel being made in the world’s top producer, lowering overall ore demand for several months, it’s also supercharged prices as inventories collapse.
Citigroup Inc. has singled out iron ore’s bullish prospects in the first quarter of 2018, raising price forecasts for both next year as well as for 2019.
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