Iron ore price leaps to six-month high

Iron ore has continued its bullish run, surging to $US63.10 a tonne, although many analysts are still tipping a fall.

Rio Tinto’s West Angelas iron ore mine in the Pilbara. (Picture: Gary Ramage)

The iron ore price has jumped to a six-month high, seemingly defying gravity amid fresh analyst calls for the commodity to drop back below the $US50 level.

Iron ore rose 1.3 per cent to $US63.10 a tonne in the most recent session, according to The Steel Index, from $US62.30 the previous day.

The commodity is at its highest point since April 29, when it settled at $US65.20.

Despite taking a breather late last week, iron ore has been rallying recently, falling only once in the last 15 sessions. Analysts attribute the rise to a mix of factors including a rally in steelmaking ingredient coking coal, a fall in major producers’ shipment forecasts and speculation on exchanges in China.

Despite pure-play miner Fortescue telling investors the market has come back into balance, some analysts are taking a less optimistic view, warning that oversupply will continue as more production comes on line.

Citi analysts reaffirmed their sell ratings on all the major Australian diversified and bulk resources stocks last week, given “our view of material price declines into 2017”.

But given iron ore’s surprising strength this year, Citi is the latest bank to upwardly revise its near-term forecast for the commodity to acknowledge its resilience.

The bank is now predicting a 2017 iron ore price of $US46 a tonne, just $US1 higher than its earlier forecast and a sharp drop from current levels.

Several other forecasts expect a drop into the low $US50s or $US40s, with the most bearish outlier at $US35 over the longer term.

In London trade, BHP Billiton shares rose 0.5 per cent, while Rio Tinto added 1.3 per cent.