At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US43.60 a tonne, up 0.5 per cent from its prior close of $US43.40 a tonne.
The upward move is just the fourth in more than six weeks, as the commodity sunk 25 per cent to a 10-year low amid questions around the strength of Chinese demand.
The period leading up to Christmas is generally a positive one for the commodity due to Chinese stockpiling ahead of the Chinese New Year holiday, but it remains to be seen if the latest rise will be the precursor to a more substantial recovery.
The move came on the back of gains in oil prices earlier in the week, which increase costs for suppliers and potentially raise the price at which production may come out of the market.
However, at current prices the “big four” miners of BHP Billiton, Rio Tinto, Fortescue Metals and Vale are likely the only firms able to turn a meaningful profit.
“Clearly we are nearing the threshold point of pain for some Australian miners, but that does not mean that prices can’t fall further,” Westpac economist Justin Smirk noted earlier in the week.
Indeed, most analysts believe the pain is far from over, with ratings agency Fitch warning on Thursday that more supply needed to exit the marketplace.
“The closure of high-cost iron ore mines has been slower than we previously anticipated, despite the sharp fall in iron ore prices since 2014. Global demand, led by China, has also been weaker than we previously anticipated, and is likely to remain muted through 2016,” Fitch said.
Source: http://www.theaustralian.com.au/