Iron ore prices raced to a 8-month high on the last trading day of 2012 after data showed that stockpiles of the commodity at China's ports continued to fall.
Benchmark import price of 62% iron ore fines at China's Tianjin port added almost 5% to $144.90 on Monday, the highest since end-April, and up 65% from September lows.
According to SteelIndex, December was the strongest month since April 2009, when the market data firm first began tracking daily spot prices.
After hitting a peak above 100 million tonnes in February, blast furnaces have been scooping up stockpiled ore at an escalating rate with data from China's National Bureau of Statistics out on Monday showing inventories of 71 million tonnes, a more than two-year low.
Today's picture is very different from the one just a few months ago when analysts including the respected Bureau of Resources and Energy Economics, the Australian government's official forecaster, were predicting a dire performance for 2012 (average $123/tonne) and this year ($101/tonne).
Not that long ago even a number of producers including the globe's top two iron miners – Vale and Rio Tinto – were expecting prices in the low triple digits.
The end of year rally appears to have caught a few industry observers by surprise and many remain sceptical that it would last.
"The price advance has come a bit earlier and a little sharper than we anticipated a few weeks ago," Credit Suisse's head of commodities research, Ric Deverell, told the Australian newspaper, adding that "the prospect is there but we would be surprised by a lasting move above $US140".
"The rally may continue into early January but will likely start to fall by the middle of next month. China's steel market is oversupplied and that supply-demand disparity will cap prices," a Shanghai broker told Reuters.
While some including investment bank Goldman Sachs are bullish – predicting an average of $140/tonne this year – most remain fairly conservative about the outlook for 2013.
According to a new study by Chile's state mining research body Cochilco, iron ore prices will average $120/tonne in 2013 before rising modestly in 2014.