Miners jump on the back of surge in iron ore price
Iron ore prices surged on Monday amid speculation a of a 'short squeeze' in the market after Chinese authorities announced measures over the weekend to prop up the country's economy and cut overcapacity in the steel market, which might help to buoy prices.
Cliffs Natural Resources Inc.
$11.04
11:09 15/11/24
FTSE 100
8,060.61
15:45 15/11/24
FTSE 350
4,453.56
15:45 15/11/24
FTSE All-Share
4,411.85
15:45 15/11/24
Mining
10,633.77
15:45 15/11/24
Rio Tinto
4,804.50p
15:45 15/11/24
VALE SP ADR
n/a
n/a
At the latest People's National Congress, held over the previous weekend, Chinese authorities lifted their target for the country's deficit on public spending deficfrom 2.3% in 2015 to 3.0% in 2016.
A target for the rate of growth in money supply was also increased as Beijing targeted a rate of expansion in GDP for 2016 of between 6.5% to 7.0%.
According to Metal Bulletin, the benchmark grade of iron ore, the main ingredient used to make steel, rocketed 19% on Monday to hit $63.74 per metric tonne.
That was the largest gain on a daily basis going back to 2009.
Futures' prices on the Dalian commodity exchange rose by their daily limit.
“We expect the current rally to be short-lived,” Goldman Sachs analysts Christian Lelong and Amber Cai said in a research note sent to clients over the weekend.
“The causality will revert sooner rather than later, and steel raw materials will one again drive steel prices rather than the other way around.”
Iron ore prices had gained 46% year-to-date and by 70% since the lows reached in December.
Some analysts referenced the restocking of iron ore inventories ahead of preak production in spring and early summer as the chief factor behind iron ore's advance.
As of 16:16GMT shares in Rio Tinto were higher by 5.70% to 2,251.50p, while those of Brazilian iron-ore producer Vale rallied 8.11% in New York trading and those in US producer Cliffs Natural Resources by another 20.41% to $3.48.