SINGAPORE Iron ore is not sticking to the script, at least for the bears. The
commodity that was supposed to be weighed down again this year by rising
low-cost supply and poor demand has soared 18%, establishing a foothold
at more than $50 a tonne.
The rebound, which means iron ore has
outperformed all the members of the Bloomberg Commodity index this year
has probably been powered by restocking by Chinese mills and some
weather-related disruption to shipments from Australia, according to
Capital Economics. These supportive factors might prove temporary, it
said.
Iron ore’s upswing has accompanied a revival in the price of
other commodities including oil and industrial metals. Glencore CEO
Ivan Glasenberg said on Tuesday that raw materials had bottomed, and
Australia & New Zealand Banking Group said on Thursday that
commodity sentiment had turned in the last fortnight, citing gains in
both crude oil and iron ore. Steel prices in China have also climbed.
Iron
ore’s gains this year were supported as a tropical cyclone in January
disrupted some shipments from Australia’s Port Hedland, the world’s
biggest bulk-export terminal, and as Chinese mills began to ramp up
output after the Lunar New Year break last month.
National Australia Bank has forecast prices to average $42 this year.
Bloomberg
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