Another surge in iron ore prices Wednesday saw new multi-year highs reached.
Global iron ore prices topped $US150 a tonne for 62% Fe fines for the first time in nearly 8 years on Wednesday, while the price of 65% high-grade ore went well over $US162 a tonne.
The Metal Bulletin’s Fastmarkets said the price of 62% fines rose 1.2% or $US181 to $150.16, the highest the price has been since March 2013.
That took the rise in December so far to nearly 14%.
The news will see investors once again chase the shares of major iron ore miners.
On Wednesday BHP climbed 1.1% to a new nine-year high of $42.73, while Rio Tinto added 0.4% to $115.44.
Fortescue Metals set another new record high close of $21.80, up 1.6%.
The company held an investor day yesterday and expressed optimism that China will continue to buy more iron ore from Australia.
But there might be a slowing in this chase as a sharp fall in gold will see that sector sold down on Thursday on the ASX and the weakness on Wall Street and rising bond yields will also hit the local market.
Driving much of the current surge has been a shortage of ore delivered from Australia and Brazil – their November shipments were down on October’s.
Also boosting demand fears the Chinese steel mills have that the central government will block or restrict iron ore imports from Australia in the same way that coal imports have been blocked, along with barley, honey, meat and wine.
Australia supplies over 60% of China’s iron ore imports and any move to delay or restrict shipments would have a catastrophic impact on steel prices and blast furnace operations – it would slow the industry to a halt just as demand for steel from China’s export and domestic infrastructure sectors was at all-time highs.
The ban on coal imports from Australia have already driven up the price of quality coking and thermal coal for Chinese importers, adding to the cost pressures on power companies and steel mills.
