Iron ore price hits five-year high
Shares in big miners lifted after the price of iron ore surged because of declining China port stocks.
The price of iron ore has surged to a fresh five-year high as iron ore port stocks in China continue to decline.
Iron ore prices tracked higher through most of June on supply concerns, with the spot price for Australia’s biggest export lifting 1.4 per cent to $US117.95 a tonne on Friday night.
That’s up from the around $US75 a tonne mark it was trading at in early January before the Vale tailings dam disaster in Brazil, which sparked a price surge.
A fall in Chinese port stocks, as well as a drop in steel inventories, prompted the latest spike, with port stockpiles falling sharply for last month, continuing a trend that began in early April.
“The decline in China’s iron ore port stockpiles primarily reflects the supply disruptions that have roiled iron ore markets this year,” said Commonwealth Bank commodities analyst Vivek Dhar.
“Headlining those disruptions was the fatal dam disaster at Vale’s Feijao mine in Brazil in late January.
“Two major events took place on the supply side in June.
“The first was the restart of Vale’s Brucutu iron ore mine in late June following court approval.
“The other major supply event was Rio Tinto’s downgrade to its 2019 iron ore shipments.
“While both events oppose each other, the net result was an increase in seaborne iron ore prices.”
Shares in the major iron ore miners all lifted on Monday, with Rio Tinto closing up 1 per cent at $104.75, while BHP lifted 1.3 per cent to $41.68. Fortescue rose 1.4 per cent at $9.15 each.
In March, Rio Tinto declared a force majeure on some of its iron ore shipments following damage to its West Australian operations from tropical cyclone Veronica.
The jump in the price of iron ore on Friday night came as Australia’s Department of Industry, Innovation and Science forecast the first decline in Australian iron ore exports in 18 years, on the back of unfavourable weather in the Pilbara region as well as operational issues.
The department said iron ore exports from Australia were likely to fall to 814 million tonnes for 2019, down from 835 million tonnes last year.