The rally in iron ore stocks appeared to be largely thanks to a strong purchasing manager's index (PMI) reading out of China. According to a report in the Australian Financial Review, the HSBC/Markit Flash PMI registered its first expansion (a reading above 50) this calendar year.
The PMI reading would be good news for the iron ore trade if it is accurately predicting a pick-up in Chinese manufacturing activity, however ultimately iron ore producers will require sustained construction activity in China as this accounts for the bulk of iron ore demand.
The other factor playing in favour of producers was an uptick in the iron ore price which last week fell below US$90 per tonne. Monday saw the price cross back above the US$90 mark.
3 high-risk/high-reward resources tips for your portfolio
Iron ore stocks could be a great investment opportunity but the demand dynamics of China do remain cloudy. A safer beta appears to a be oil, copper, and gold stocks - these commodities continue to be in high-demand -- and their popularity doesn't look to be slowing. We've uncovered three companies poised to benefit from the rising prices of these commodities.
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