Iron ore price, page-27288

A subscription service I subscribe too think all our IO plays have much further to run.
If some people think we are at the peak they would be wrong going by this article.

The resource sector was under some pressure yesterday with BHP down almost 3% while Rio and Fortescue both shed 1.4%. To be fair however these stocks have all made record highs recently, and there is likely an element of profit taking here and considering iron ore prices are around US$170 a tonne.

Iron ore is at near record levels after breaking out at $90 a tonne last year

The outlook for commodity demand this year is robust in my view, and particularly given economic activity in China, the sector’s biggest customer, is rebounding strongly. In fact, the pace of the recovery post Covid is accelerating, with GDP jumping 6.5% in the fourth quarter, and following on growth of 4.9% in the three months previous.

China is engaging on a major economic reboot, which is being led by a massive infrastructure investment program. China is providing the playbook for how to emerge from the Covid inspired downturn. I expect many other countries will increasingly follow suit (and in terms of infrastructure investment) this year and the US could roll out a big program now that the Democrats control the upper and lower houses. This has to be positive for commodity demand and prices, and which will likely see a further tailwind from rising inflation.

This is good news for our commodity centric economy in Australia. This will only add to the momentum and optimism we are already seeing due to our relatively strong health outcome from Covid, a buoyant property market, and the freedoms that we enjoy compared to other countries.

The commodity bull market has much further to run in my view. Looking at a multiyear chart the Bloomberg Commodity Index, price levels are still well below the 2007 highs, having only just recently broken up from a descending wedge formation.

Bloomberg Commodity Index – 2007 to 2021