Ore prices jump as China imports rise

IRON ore prices have bounced back, rallying 4.5 per cent after new China trade figures.

It comes after the spot price last week fell below $US60 for the first time since June.

Prices regained ground at the weekend to $US60 a tonne, according to research house The Steel Index.

National Australia Bank head of foreign exchange strategy Ray Attrill said the gains were driven by Chinese trade figures released last week that showed iron ore imports rose above 100 million tonnes in September for the first time on record.

The resulting gain in the iron ore price “was probably more psychology-driven than anything else”, Mr Attrill said.

ANZ senior economist Joanne Masters said the import figures showed that China’s demand for iron ore remained strong.

“Total volumes imports in the first nine months are now up 7.1 per cent year on year,” she said.

“At the same time, inven- tories fell. This saw a pick-up in investor appetite, with futures trading on Singapore and Dalian exchanges surging higher.”

Deutsche Bank said in its quarterly commodities report that steel production had grown for the first eight months of the year, between 5 and 6 per cent.

“Steel production in China in July and August has been stronger than the usual historical seasonal patterns,” the report said.

It said the first and fourth quarters of the financial year were typically the weakest periods for demand and steel production but that the latest iron ore price increase “suggests there has been a degree of demand ‘bring forward’. . . in anticipation of the winter restrictions”.

“We expect the [Chinese] Government’s efforts to reduce pollution and improve air quality to be a structural theme that persists for at least the next five years,” the report said. Shares in BHP and Rio Tinto rose by 2.2 per cent and 3.4 per cent yesterday.