Iron ore has begun to retreat from its 16 month high.
Last week the metal rose to just over US$70 per tonne, marking a 61.7 per cent gain, and the third largest surge since spot pricing first began in May 2009, but movement in China against over-speculative market has brought price reversals.
Much of the earlier upwards movement was off the back of Rio Tinto, BHP, and Vale taking action to address the glaring oversupply issues by announcing cuts in forecast output guidance for this year and the next, as well as increasing speculation in China as investors poured money into commodity stocks.
Poor weather in the March quarter was blamed for BHP cutting guidance for iron ore production in the Pilbara, a move which may allow some breathing room for the juniors.
The company shaved ten million tonnes off their previous 2015/16 guidance of 270 million tonnes, which combined with the stoppage at Samarco in Brazil will bring BHP’s global production for this financial year down by around 30 million tonnes.
Rio Tinto recently cut production guidance by 20 million tonnes from 350, but blamed issues with introducing automated, driverless trains for the slower than expected expansion.
Vale also cut guidance earlier.
However despite this apparent strength and market movements to cut stockpiles, iron ore has begun a price reversal.
Yesterday the Northern China benchmark price at the Port of Tianjin fell 5.6 per cent to US$60.50.