Bloxo: Iron ore to soar!

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From Bloomie:

Iron ore is heading for the biggest monthly increase this year on speculation that demand for imports in China may be improving, helping to absorb a global surplus as local supplies in the largest buyer are displaced.

Ore with 62 percent content delivered to Tianjin rose 0.6 percent to $US95.90 a dry tonne yesterday, according to data from The Steel Index. The raw material climbed 2.2 percent this month, poised for the largest advance since November. Prices gained a similar amount in June, snapping six monthly losses.

Iron ore rebounded last month from the lowest level since 2012 amid signs that rising seaborne supplies from Australia and Brazil are starting to spur the closure of some higher-cost production in China. The price of iron ore will have a dramatic recovery this half, Sanford C. Bernstein forecast in a July 9 report, saying that it’s now cheaper for steel mills in China to buy seaborne supply rather than domestic material. The commodity entered a bear market in March.

“Iron ore prices are lifting in part due to a pickup in demand from China,” Paul Bloxham, chief Australia economist at HSBC Holdings in Sydney, said. “We expect this to continue and for iron ore prices to head above $US100 a tonne in the near future.”

“Speculation” being the operative word. It may happen but there is currently zero evidence for it.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.