Iron ore price soars 6 per cent
The iron ore price has jumped sharply in a fresh bout of speculation that defies forecast declines.
The iron ore price has jumped sharply overnight, in a fresh bout of speculation that flies in the face of forecasts for further declines to come.
Iron ore soared 6.1 per cent to $US58.80 overnight, according to The Steel Index, from $US55.40 in the previous session.
The commodity could be getting a very brief and misguided boost from the Philippines’ win against China in a case challenging Beijing’s sovereignty over the South China Sea, although longer term the decision offers no support for prices, according to steel analyst Charles Bradford.
“The Philippines have no capability of stopping iron ore shipping,” the Bradford Research president told The Australian from New York.
And he says military and shipbuilding demand for steel in the US is “meaningless” in the context of all steel consumption. “I wouldn’t think China would be much different,” he said.
“But a lot of people have a knee-jerk reaction: say ‘Defence! Steel!’ It’s not true.”
Mr Bradford said the price jump could also be due to some speculation on the Dalian iron ore exchange or expectations of fresh stimulus in Japan after the weekend’s elections.
“It seems to me this is a very short-lived move,” he said. “There is still a massive amount of new capacity coming online within the next few months.”
Several banks and other forecasters are tipping that the iron ore price will drop into the low $US40s or low $US50s over this year and next as supply continues to outstrip demand.
In London trade overnight, BHP Billiton shares added 1.1 per cent, while Rio Tinto rose 1.7 per cent.