The iron ore price has reversed a three-day losing streak, edging higher as traders cover shorts ahead of next week’s public holidays in China.
But a jump in the oil price pushed Australia’s diversified mining giants higher in London trade, despite a relatively modest move in iron ore.
Iron ore rose 0.4 per cent to $US56.10 overnight, according to The Steel Index, from $US55.90 the previous day.
Exchanges in China are set to be closed for all of next week for the National Day holidays, with traders keen to settle positions before the break.
Oil bulls fared better, with crude prices jumping yesterday on news that OPEC members had agreed to cut production to stabilise the market, before extending gains today. US crude rose 1.7 per cent to $US47.83 a barrel, after lifting more than 5 per cent in the previous session.
The upbeat oil news boosted BHP Billiton some 6.5 per cent in London trade, while Rio Tinto rose 4.3 per cent, gains that could augur well for the miners when the ASX opens this morning.
The market moves also come as a statewide power outage in South Australia caused a temporary interruption to some mining activity.
Arrium’s iron ore mines remain closed after the severe storm damaged power lines and interrupted power across the state. Arrium’s steelworks at Whyalla are also shut, as are a BHP Billiton-owned copper and uranium mine and an OZ Minerals copper mine.
Iron ore has recently been hovering above Budget estimates of $US55 a tonne, but several analysts expect the commodity to fall further over this year and next as supply continues to outpace demand.
Source:The Australian