The good news keeps coming for the mining sector, as commodity prices continue to jump to levels not seen in years.
The Steel Index recently recorded iron ore prices having soared beyond the US$90 a tonne mark, representing a 5.5 per cent rise in the past week. Apparently these prices have not been seen in at least 2.5 years, signalling better times ahead for iron ore production in Australia.
The price has steadily risen 14 per cent in the past fortnight from the previous US$80.20 a tonne, according to The Australian, which suggests the price hike is due to high Chinese ore imports.
“The fact we have seen stockpiles of iron ore at Chinese port increase to a new 10-year high of 127 million tonnes (+2.8 per cent on the week) is certainly helpful,” IG chief market strategist Chris Weston told News Limited.
“But then you also hear that the Chinese Ministry of Environmental Protection has proposed a draft to further cut steel and aluminium producers by as much as 30 per cent in 28 cities across five regions, and this is like a red rag to a bull for the speculators.”
Analysts had predicted iron ore would not rise above $US90 a tonne until at least the year 2020. However, they maintain the current price will be temporary and eventually fall to about $55 a tonne.