CHART: Iron ore is having a great December as Chinese stockpiles are slashed
Benchmark 62% iron ore at China's Tianjin port add more than 2% on Friday to $121.00 a tonne, the highest price since November 20 according to data from Steelindex.
So far in December the steelmaking raw material has added 4.7% in value, building on gains in November that saw the commodity consolidate around the $120 level.
$120 is a psychologically important level in the industry because most producers – including China's notoriously fragmented and high cost miners – make money at this price.
Iron ore has now recovered 38% in value since hitting 3-and-a-half year lows at the start of September of $87.
At sub-$100 levels according to number two producer Rio Tinto as much as 150 million tonnes of capacity from domestic Chinese producers are closed down.
Which explains why China's steelmakers, suffering from a collapse in profitability, have been taking to the vast stockpiles at the country's ports.
After hitting a peak above 100 million tonnes in February, iron ore inventories have been sitting at between 90 and 100 million tonnes for the first 9 months of the year.
However since September's price low, blast furnaces have been scooping up stockpiled ore at an escalating rate – inventories are down 9.6% in November alone.