The rally in the price of iron ore gained momentum on Tuesday with the steelmaking raw material scaling the $60 mark for the first time in more than a month.
Northern China benchmark prices jumped 3.2% to $61.80 per dry metric tonne (62% Fe CFR Tianjin port) according to data supplied by The Steel Index.
Iron ore is up 7.5% over two days of trading and the wild movements mirror that of last week when the price stopped just short of $60. The latest gyrations follow an insane 19.5% one-day rally in early March, the biggest jump since the introduction of a spot pricing system nearly a decade ago when the price reach its 2016 high of $63.30.
The steelmaking raw material now boasts a 44% rise year to date and a more than two-thirds surge from near-decade lows reached mid-December.
Iron ore’s run has not convinced most bears. Goldman Sachs said last month it expects the price to average $38 this year (Q1 average is $48) and so far that call hasn’t been changed. The median iron ore price forecast compiled by Bloomberg is $45 per tonne this year and next.
Yesterday Citigroup also displayed doubts about the rally saying in a note “prices may remain high in the second quarter before the rally fades”:
“Weaker-than-expected Australian exports and more resilient Chinese steel production have kept prices elevated. However, both trends are likely to reverse in the medium and long term.”
The investment bank’s research team predict an average of $45 a tonne in 2016, $39 next year and $38 in 2018. And those forecasts are actually up from its prior estimates of $39 for this year, and $35 for both 2017 and 2018.