Iron ore price soars 5%

After an extended break during Golden Week holidays, Chinese traders made the most of soft iron ore prices to replenish inventories that remain more than 20% lower than a year ago.

The Metal Bulletin's benchmark 62%-index at the ports of Qingdao-Rizhao-Lianyungang in China surged $2.83 or 5.3% to $55.97 while higher grade 65% Brazilian fines moved back above $60 a tonne to, a 3.5% gain on the day.

Gains for The SteelIndex benchmark 62% Fe import price including freight and insurance at the Chinese port of Tianjin were more subdued adding 0.7% to $54.80 a tonne, a two week high. That's up nearly 25% from record lows hit July 8.

Stocks of the steelmaking raw material at China's biggest ports rose in September to 83 million, but are still significantly below the 110 million tonne level recorded this time last year.

Ore's resilience (and relative price stability) compared to wild price swings in other metals – notably copper – in recent weeks has been despite consensus forecasts of fresh record lows before the end of the year.

While moderating demand from Chinese steelmakers – responsible for buying up than 70% of the seaborne trade – have long been factored into the price, supply is only growing.

Australia's Port Hedland, the world's busiest ore terminal, reported record monthly iron ore shipments of 39.3 million tonnes in September while Brazilian iron ore exports hit 35.6 million tonnes, the best month of the year so far.

And then there's Gina Rinehart's Roy Hill which from this month will start ramping up to 55 million tonnes per year at breakeven costs below $35, adding yet another source of low-cost tonnage.

Roy Hill prompted the Australian government last week to raise its export estimates for this year to 762 million tons from 748 million before.