Iron ore sails past $US80 yet again

The iron ore price has jumped above $US80 once again, amid a subtle start from China’s smaller mining players.

The Steel Index recorded a 3.2 per cent increase in the iron ore price to $US80.10 a tonne, up from $US77.60, according to The Australian.

This comes after iron ore hit a peak of $US82.40 in December last year – more than double the $US37 price it reached in December 2015 – due to strong infrastructure investment in China.

Goldman Sachs highlighted that while the iron ore price averaged between $US70 and $US80 a tonne over the past month, there have not been any major production increases at China’s domestic mines.

The investment firm does not expect prices to drop in the near term.

“Muted response from marginal miners in China lends support to near-term prices continuing to trade above costs, and is especially so if major miners experience seasonal shipment difficulties in Q1 2017,” Goldman Sachs said.

The Department of Industry, Innovation and Science, however, revealed an iron ore price forecast of $US51.60 a tonne this year and an even lower $US46.70 per tonne for 2018 due to slow growth in worldwide demand, as well as low cost supply on the seaborne market.

Shares in Rio Tinto have increased by 5.1 per cent and have jumped 4.4 per cent in BHP in the UK trade.

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