Rio Tinto shares hit an 11 year closing high of $105.30 yesterday as world iron ore prices crashed through $US108 a tonne (More than $A156 a tonne).
It was a one day rise of $2.22 (2.2%) and the highest price since May 19, 2008, when it traded at $118.69.
BHP shares had a quieter day out rising 1.7% to $38.60, the highest they have been since later April.
Fortescue Metals Group shares were up a modest 0.1% at $8.46.
The companies sell and account their sales in US dollars but their costs are in Australian dollars and the slide in the currency this year to around 69 US cents has only increased their cost competitiveness.
The rises came after the Metal Bulletin 62% Fe index rose more than 3% on Monday to $US108.62 a tonne (up $US3.30 a tonne).
The small rise in the price of Fortescue shares was odd given that the Metal Bulletin’s index for 58% Fe jumped by nearly 3.5% to $US99.46 a tonne.
The Metal Bulletin index for 65% Fe ore traded up more than $US4 a tonne a $US123.40 a tonne which will help Vale, the big Brazilian miner (which ships a lot of 65% Fe ore to China) seeing it is still grappling with the fallout from the January 25 dam wall tragedy and the impact of that and other dam wall problems on its production and exports.
The fall in iron ore port stocks in China last week (down by around 4 million tonnes to 128 million tonnes is less than six weeks supply and getting closer to worrying lows for the Chinese mills.
Vivek Dhar, mining and energy commodities strategist at the Commonwealth Bank said on Tuesday. “The fall in China’s iron ore port stockpiles since early April has been a major reason for the uptick in iron ore prices in recent weeks. China’s port stocks are an important indicator of surplus and deficit concerns in iron ore markets.”
Steel production remains strong in China (it hit a record 85.03 million tonnes in April) and there’s been no sign of any slackening in May of that rate of output.
