Iron ore has bounced higher on the back of hopes in renewed Chinese metal demand, finally breaking over the $US50 per tonne mark for the first time since September.
The benchmark price for the steel-making commodity rose 7 per cent to $US50.30 overnight, representing a rise of 36 per cent from the December 11 10-year low of $US38.30 per tonne.
The price of steel also rose in China thanks to seasonal New Year demand, and efforts to deal with the issues in the construction sector.
Iron Ore Research director Philip Kirchlechner said there was more optimism about the commodity, predicting average prices of $45 to $55 per tonne in the first half of the year.
“One major factor is the exiting of high-cost Chinese ore production,” he said.
“There is some excitement, partly by demand for construction steel.
“Construction is expected to pick up again as weather improves.”
Exports from Port Hedland were down 10 per cent in January from December, and in Brazil Vale has also said it was shipping less in the fourth quarter than the previous quarter, in part related to the production halt at Samarco Mineracao after tailings dams burst with disastrous consequences in November.
Last week Bloomberg reported predictions of a price recovery to more than $US50 per tonne, supported by the loss of output by Samarco, and that new supplies from Roy Hill were far from making up the differences lost.
BHP shares gained 0.58c on the ASX yesterday, climbing from $16.58 to $17.18, while Rio Tinto rallied $1.48, going from $42.61 to $44.09.
Copper also climbed a respectable 2.5 per cent to $US4700 per tonne, 10 per cent higher than the six-year low in December.