The iron ore price is making a run after bottoming out below $US80 per tonne in late October.
According to Mysteel, the price for 62 per cent seaborne Australian iron ore fines at the port of Qingdao rose for the fourth straight day on November 16 to settle at $US97.85 per tonne.
Bloomberg reported that Beijing, China’s sprawling capital, is said to be preparing an extensive package aimed at easing developers’ liquidity strains and reviving home purchases. China also recently announced a softening of quarantine measures, and that local governments would no longer have to trace contacts of contacts.
Both measures would be stimulants for the iron ore market.
Each of BHP, Rio Tinto and Fortescue Metals Group enjoyed a spike in their share prices as trading opened on Monday morning.
BHP jumped from $42.10 at close on Friday to $43.65 at 10am on Monday, and Rio and Fortescue rose from $102.89 to $106.93 and $17.68 to $19.17, respectively, across the same time span.
Nearing close on Thursday, BHP, Rio Tinto and Fortescue had maintained 5.5 per cent, 5.2 per cent and 12.3 per cent share price increases across the past five days, respectively.
Rio Tinto Iron Ore chief executive told the ABC last week that the long-term future of its iron ore business remained strong.
“The world continues to need steel and will continue to need steel for the lives people want to live as well as future decarbonisation,” he said.
All three of the majors have opened new iron ore operations in the Pilbara in the last 18 months: BHP’s South Flank mine, Rio’s Gudai-Darri mine and Fortescue’s Iron Bridge project.
Lachlan Shaw, co-head of resources research at UBS, told the ABC last week that the high cost of iron ore operations would see miners lower their production, which will in turn reduce supply and, eventually, lead to a rise in the price.
It seems Shaw may have been onto something if the recent rise is anything to go by, but time will tell if the rise continues as the year comes to an end.
Rio’s Trott seems to think so, saying that while the iron ore market is coming out of a bleak period, mining is a much longer game than most industries.