Iron ore price taps six-week high as rally continues

Iron ore has extended its winning run, pushing above $US58 a tonne after notching up nine sessions without a fall.

Iron ore awaits loading at BHP Billition Ltd.'s loading facility at Nelson Point in Port Hedland. (Photographer: Nelson Ching/Bloomberg News)

The iron ore price has again pushed higher, reaching its highest point in more than six weeks and rising above even the most bullish forecasts.

Iron ore added 0.7 per cent to $US58.40 a tonne overnight, according to The Steel Index, from $US58 the previous day.

The commodity reached a peak in mid-August of $US61.80 a tonne, then spent weeks sliding back to levels in the mid-$US50s that are seen as more sustainable.

But over the past two weeks, the key export has resumed its surprising rally and has not fallen for nine sessions in a row. Macquarie analysts have attributed the run to lacklustre exports from both Australia and Brazil.

The boost comes as major miners unveil their quarterly production figures, with BHP offering an upbeat outlook for commodities and Rio Tinto trimming its guidance after missing analyst forecasts for iron ore and copper output.

Deutsche Bank analysts assume an iron ore price of $US57 a tonne when valuing BHP, which, even on a longer-term view, places the bank among the most optimistic of observers.

The bank reaffirmed its “hold” rating after BHP’s report, citing earnings growth from low cost mining projects through brownfields expansions, as well as the sale of non-core assets including the earlier demerger of South32.

But Deutsche warned risks to its forecast include a continued medium-term slowdown in Chinese steel demand, which could result in lower iron ore demand and thus lower prices. On the flip side, recovering demand or supply cuts could boost iron ore prices, Deutsche said.

In London trade, BHP shares fell 0.1 per cent, while Rio lost 0.2 per cent.