Iron ore rallies to three-month high
- DANIEL PALMER
- 44 MIN AGO
The price of iron ore has risen for a second straight day, moving to a three-month high despite the release of more dire forecasts from analysts.
At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US62.60 a tonne, up 0.8 per cent from its prior close of $US62.10 a tonne.
The commodity is almost 35 per cent above the 10-year low of $US46.70 a tonne reached in April and testing the $US63 mark for the first time since March 1.
The latest gain came despite a downbeat outlook from UBS, which said prices would likely fall to $US45 a tonne before the end of the year unless more tonnes are removed from the market.
"We've got Roy Hill coming to the market in the second half, so we think there's a bit of a short-term uplift and it should fade from here," UBS global commodity analyst Daniel Morgan said, according to the ABC, adding that prices would likely steady around $US55 in coming years.
The UBS forecast is far from the most pessimistic in the market, with Goldman Sachs and Deutsche Bank warning of a potential fall into the $US30s earlier this year.
However, the deputy head of the China Iron and Steel Association, Li Xinchuang, has struck a more optimistic tone, suggesting the current price is sustainable for the next couple of years despite agreeing with recent commentary that Chinese steel consumption likely peaked in 2014.
"I don't think the iron ore price will be down very, very low — even lower than $US40 as some forecast," Mr Li told the ABC.
"It will be around $US55 to $US65 ... that's my personal forecast for the next two years."
The recent recovery in iron ore prices has largely been driven by steady data out of China as well as reports of dwindling stockpiles at Chinese ports, but it's unclear how the market will respond as more tonnes come on the market from the likes of Rio Tinto, BHP Billiton, Vale and Gina Rinehart's Roy Hill in the next 12-24 months.
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