Iron ore prices have started 2017 with something of a bang – hitting two year highs well above $US80 a tonne in the past day or so as Chinese steel mill buyers and speculators resume their chase of the commodity.
The spot price for 62% ore (fines) jumped by 3.9% to $US83.65 a tonne on Monday, leaving it at the highest level seen since October 14, 2014.
But overnight Tuesday it fell back by around 2% to just over $US81, still very high compared to a year ago when it was wallowing around $US40 a tonne and all manner of doom and gloom was being forecast.
It’s now added 4% this year, following the surprise 81% surge in 2016.
From the record low spot price of $US38.30 a tonne on December 11, 2015, the benchmark price is now up 116%. That has seen the prices of major miners such as BHP, Rio Tinto and Fortescue surge as well – Rio shares were up 34% in 2016 and more than 5% so far this year on hopes its managed to ride the price surge higher, despite of ongoing production problems at its huge Pilbara mines which was again confirmed in yesterday’s December quarter production report (see separate story).
BHP shares jumped 40% last year and are up nearly 7% so far in 2017, while Fortescue Metals stood out with a 215% surge in 2016, and a 7.6% gain so far in 2017. BHP reports its second quarter figures in a week’s time, Fortescue on January 31.
The reason isn’t hard to find – China and its record-busting buying, particularly in the closing months of 2016.
The latest Chinese import data from last Friday showed imports of iron ore rose 7.5% to a record 1.024 billion tonnes last year, topping the 2015 record of 952.84 million tonnes.
December saw iron ore imports slip to 88.95 million tonnes, down 3.2% from November and 8% from the monthly record of 96.26 million tonnes set in December 2015.
