THE price of iron ore has moved away from a new five-and-a-half-year low after a four-session losing run.
At the end of the latest offshore session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US63.00 a tonne, up 0.8 per cent from its previous close of $US62.50 a tonne.
The commodity is now 3 per cent above the five-and-a-half-year low of $US61.10 a tonne set three-and-a-half weeks’ ago, but still at risk of falling below $US60 for the first time since 2009.
Most analysts are predicting the commodity to trade in the range of $US60-$US65 a tonne for much of the next two years, though some have called for a brief retreat into the $US50s at some stage before a price floor can be found.
News yesterday that China’s manufacturing sector again contracted in February will do little to lift sentiment amongst buyers, though the 25 basis point rate cut from the People’s Bank of China — announced on Saturday — offers hope to the sector.
A trend for the rest of the year is likely to be set in the next few weeks as construction season gets underway in China. Should demand fail to spike significantly, iron ore could be set to extend on the falls it has seen over the past year.
The commodity’s value has halved over the past 12 months as supply ramps up from industry giants.
Among the sector heavyweights are BHP Billiton and Vale, with both firms hinting at persistent pressure on prices through 2015 while reporting softer financial data last week.
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