Iron ore prices break the $US100 mark

Iron ore.

Prices for iron ore have reached a five-year high driven by higher steel production in China and speculation of another dam collapse at a Vale mine in Brazil.

The Chinese import price of 62 per cent iron content broke the $US100 ($144.7) per dry metric tonne for the first time since early 2014.

China, which imports more than 70 per cent of the world’s seaborne iron ore, drove the price rise of the commodity following a record-breaking month of steel production equating to 85 million tonnes in April.

The country’s steel output has rebounded following a slow fourth quarter last year, providing increased demand for the commodity.

Stricter environmental regulation and mining reforms has also limited China’s supply of domestic ore, while creating a need for premium grade iron produce.

China’s activity coincides with Vale’s announcement it had identified movements at the North slope of the Gongo Soco mine pit in Minas Gerais, potentially leading to a displacement of the slope and affecting a tailings dam nearby.

Vale has been plagued by challenges to its global iron ore supply since the January collapse of its Brumadino dam, with iron ore prices jumping nearly 30 per cent since the incident.

Higher prices benefited the major players in the iron ore industry with Fortescue Metals Group’s share price surging 6.6 per cent on Friday to $8.95 following the announcement.

Rio Tinto shares also jumped 2.1 per cent to $101.35, while BHP shares increased by 2.5 per cent to $38.46.

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.