Iron ore price surges 4%
The iron ore price rocketed more than 4% on Tuesday, extending a rally that began on Monday as the commodity continues to recover from a sharp sell-off during the final week of May.
The benchmark import price of 62% iron ore fines at China's Tianjin port gained 4.2% or $4.70 to trade at just under $116.60 a tonne on Tuesday.
A slowdown in China which consumes more than 60% of the seaborne trade has been cited as the reason behind last week's more than 8% plunge.
But better than expected economic data over the weekend and a realization that destocking at the country's blast furnaces, which almost makes as much steel as the rest of the world combined, may have been overdone has led to the resurgence.
Stocks at the country's major ports have fallen more than 25% from levels of much of last year of around 100 million tonnes.
A price floor of around $120 a tonne has become something of a rule of thumb in the industry – when prices stay below this level for long enough high cost mines in China become unprofitable leading to cuts in supply.
The steelmaking ingredient is still down more than 25% from its 2013 high of $159 hit in February and the recent sharp pullback was beginning to resemble the declines suffered in the fall of 2011 and again in 2012.
Iron ore hit an all time record in February 2011 of over $190 and famously eight months later suffered a $60 drop over the duration of 28 days.
The market suffered a similar shock in August-September last year when the Chinese import price dropped 25% over a month to a three-and-a-half year low of $86.70.