Business Times reported that iron ore prices hit an eight month high this week. Iron ore is seen as a proxy for industrial activity and construction in China.
The commodity is critical for the profitability of mining groups, including Vale, Rio Tinto, BHP Billiton and Anglo American, as well as Japanese trading companies, like Mitsui. The price of iron ore is also crucial for large steelmakers, including ArcelorMittal and Baosteel Group of China.
Iron ore prices hit a three year low of USD 88 per tonne in early September, prompting concerns among many executives and politicians in iron ore rich countries, like Australia and Brazil, that the commodities boom was over.
But since then, iron ore prices have rallied strongly. The cost of the commodity used in steelmaking has risen almost 60% since early September as Chinese steelmakers restock after running down their inventories during the third quarter of the year.
Analysts said that steel production in China remained robust.
According to Platts, the pricing agency, recently, the cost of the benchmark iron ore 62% iron content delivered in China surged to 139.75 per tonne, the highest since mid May. Iron ore has traded as high as USD 150 per tonne this year, having hit a record high of almost USD 200 last year.
The rosier outlook for iron ore has spurred strong inflows to miners of the commodity over the past two weeks.
Source - Business Times
