Iron ore continues from strength to strength as it reaches US$70.46 per tonne.
This continual upwards movement extends this year’s gains to 61.7 per cent, and marks the third largest surge since spot pricing first began in May 2009.
The metal now sits at its highest point in 15 months, and an 84 per cent rise since the lows of US$38.30 iron ore saw in December.
Much of this upwards movement is 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.
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 has 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 BHPs 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 driverless trains for the slower than expected expansion.
Vale cut guidance earlier this week.
“Production in the first quarter and the plan for the rest of the year suggests an annual production towards the lower end of our original guidance of 340-350 million tonnes,” it said in a statement.
However these rallies are unlikely to last, as the iron ore price rises increases the likelihood of smaller and more marginal producers coming online and lifting production increases.
Additionally, with Gina Rinehart’s Roy Hill mine coming fully online and Vale’s S11D mine on the horizon the planned reduction in tonnes may be negated.