07 Dec Iron ore price closes in on eight-year high, boosting Australian producers
The iron ore price has continued its meteoric rise of late, surging by 5.8% during Monday trading to US$145 per tonne – its highest recorded level since March 2013.
The upward price movement has been driven by two factors; supply side issues out of Brazil following the release of reduced output forecasts by key iron ore producer Vale SA, and strong demand emerging from China.
Iron ore port stocks in China – the world’s biggest buyer of the commodity, at roughly 70% of demand – have contracted for three consecutive weeks to December 4, in an indication of growing deficit conditions in China.
And on the supply side, prices have been buoyed by Vale’s forecast announcement last week. The Brazilian mining giant expects to miss a previously lowered 2020 target of at least 310 million tonnes of iron ore.
The perfect storm of rising Chinese demand expectations and lower supply from a key global supplier have boosted Australia’s three largest iron ore producers – BHP, Rio Tinto and Fortescue Metals Group (FMG).
Mining magnate Andrew Forrest’s Fortescue made the biggest gains during Monday trading, rising by 3.8%. FMG has seen its stock rise by an incredible 90% this year, while the iron ore price has increased by 56% to be the best performing commodity of 2020.