Iron ore soars past $70 a tonne

Prices have climbed almost 7% since Monday.

Iron ore continued this week’s sharp rally and is now back above $70 a tonne, a level not seen since April 11.

Ore with 62% content in Qingdao climbed 2% to $70.24 a tonne, according to the Metal Bulletin. It means that since Monday the commodity has surged about 7%. And from the recent low of $53.36 a tonne hit on June 13, the benchmark price is up almost 32% — an impressive return in a little over a month.

From the recent low of $53.36 a tonne hit on June 13, iron ore is now up almost 32%

The fresh surge comes at a time when Chinese steel prices are rallying, said the Metal Bulletin, noting that a strong rebound in futures pushed up spot rebar prices during the session.

It also follows Rio Tinto’s (ASX, LON:RIO) announcement Tuesday that it now expects shipments from Australia to reach 330 million tonnes, down from its April forecast of 330 million-to-340 million tonnes.

Additionally, China's imports of the steelmaking raw material this year are on course to exceed 1 billion tonnes, breaking last year's record.

The fresh rally has not made main forecasters change their negative outlook for the iron ore prices. Morgan Stanley recently cut its estimated third quarter price and the investment bank now sees iron ore averaging $50 a tonne over the period, climbing to $55 in the final three months.Iron ore soars past $70 a tonne

The latest forecast from the Morgan Stanley is more optimistic than predictions in a research note Citigroup released last month.  The bank lowered its price outlook by a fifth saying iron ore will average $48 a tonne in Q4 2017, down from $60 in its previous prediction.

Both analysis blame growing global supply  – particularly from Vale's S11D mine and Roy Hill in Australia hitting full production – for the weak outlook. According to Citigroup, 2017 will see a surplus of 118m tonnes following a more than 60m tonnes glut last year. Morgan Stanley predicts nearly 40m tonnes of oversupply this year, growing steadily to top 120m tonnes in 2019 and 185m excess tonnes in 2021.