Iron ore’s winning streak shows no signs of slowing down, with the commodity just cents away from $US60 a tonne.
At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US59.20 a tonne, up 0.9 per cent rise.
The upswing comes as Chinese steel mills replenish inventories, but most analysts believe the surge will be short-lived.
The Department of Industry and Science in Australia has reiterated its $US60 a tonne forecast for 2015.
“We’re happy to stick by the $60 in the near term as an average price,” the department’s chief economist, Mark Cully, said yesterday.
“We see the current price being driven by market sentiment rather than fundamentals.”
These fundamentals include a slowing growth rate in China leading to weakened steel production and an oversupply of iron ore.
Analyst Adrian Prendergast said data out of China this week around PMI and iron ore stockpiles could work to halt iron ore’s price rise.
"Fundamentally we have not seen any improvement in the iron ore market, and the spot market is so illiquid a short rally is easy to occur. We need to see demand-linked data improve (or at least stop getting worse) in the Chinese steel industry for us to gain any confidence in the current rally. Good volatility for traders, but no change in fundamentals," Prendergast said.
Since dropping to $US46.70 a tonne on April 2, iron ore has gained 25 per cent.
The price rise is good news for miners BC Iron, Mt Gibson and FMG which all suffered a margin squeeze when the price of the commodity started to tank earlier this year.