Iron ore soars to nearly $60 per tonne

Iron ore soars to nearly $60 per tonne

The price of iron ore soared on Tuesday on the back of new capacity cuts in China and geopolitical risks related The Hague’s ruling that there is no legal basis for Beijing’s “nine-dash line” claiming rights to the majority of the South China Sea.

The import price for 62% iron content fines at the port of Qinqdao climbed 6.7% to $59.38 a tonne. The gain was the largest one-day percentage increase since 21 April, reaching gains of 36.3% so far in 2016.

In addition, today’s price rally follows the news of record iron ore shipments from Australia to China in June through Port Hedland, the world’s largest iron ore loading terminal.

Figures released by the Pilbara Ports Authority showed that over the month iron ore exports totalled 41.808 million tonnes, surpassing the previous record high of 39.534mt shipped in March 2016.

There was 454.2mt shipped over the past 12 months in cumulative terms, the highest total record and 3% above the levels recorded in the 2014-2015 financial year.

Rising production despite a drop in Chinese steel production led Australia’s official forecasting agency on Friday to cut its 2016 price forecast by nearly 2% to $44.20 a metric tonne, due to concerns over slowing demand growth and it sees almost no change in 2017.

This is below the current price of today’s $59.38 a tonne and the first-half average of $48.

China’s iron ore mine production dropped 6% from a year ago from January to April and is anticipated to fall by 12% in 2016 and by a further 20% in 2017, Australia’s Department of Industry, Innovation and Science reported.