Iron ore price jumps past $US55
DANIEL PALMER 1 MIN AGO
ECONOMY COMMODITIES MARKETS
The price of iron ore has again surged past $US55 a tonne, after it had held below that mark for three out of the prior four trading sessions.
At the end of the latest offshore session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US55.60 a tonne, up 2.6 per cent from its prior close of $US54.20 a tonne.
The positive showing was its second best gain for the year-to-date, but the commodity remains nearly 60 per cent off where it was at the start of 2014 and over 20 per cent below where it started this year.
The latest bounce will serve as cold comfort to those in the sector as every major dip over the past 15 months has been met with a minor recovery that has gone nowhere. Indeed, in the past four sessions the commodity has seen two significant retreats to multi-year lows and two rises back to the key $US55 level.
Analysts and miners will be looking for the commodity to move above $US60 for several weeks before anyone is brave enough to say the worst is over.
Many forecasters now believe the commodity will hit the $US50 mark before a floor is found, with Morningstar analyst Matthew Hodge among the growing number of bears.
In an alarming note to clients yesterday, Mr Hodge said the supply-demand dynamic had turned “ugly” as the big miners ramped up production and demand growth turned "anaemic".
“The flattening cost curve is bad for the long-term price and cash flow for all iron ore miners, particularly Fortescue,” he said.
Fortescue, for its part, maintains it is in good shape as it continues to move down the cost curve, though it is likely making a profit of just $US2 or $US3 a tonne at current prices.
The miner's boss, Nev Power, this week added his voice to the chorus of criticism levelled at the tactics of BHP Billiton and Rio Tinto, labelling their strategies "completely flawed", with Mr Hodge agreeing that plans to increase supply were fraught with danger.