A second straight positive session after seven in the red has the price of iron ore edging back toward the $US50 mark despite lingering concerns about a crippling oversupply.
At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US47.90 a tonne, up 0.6 per cent from its prior close of $US47.60 a tonne and more than 2 per cent above its recent low of $US46.70, which marked a record trough since the index began operation in May 2008.
The latest price action has been reminiscent of previous recoveries during the 18-month bear market, with the price often enduring a sharp leg down then bouncing only to fall further after a brief stabilisation period.
Downtrodden miners will be hoping that the latest recovery offers more respite, but analysts remain downbeat as forecasts largely rest in the $US40 to $US50 range.
The latest pricing development comes as China signals intent to keep its miners in operation by slashing the local iron ore tax by 40 per cent.
Iron ore miners in China are seen among the highest-cost producers still in operation, with many tipping supplies from the country to be cut as prices collapse.
However, the latest move from Beijing is a sign the country is unwilling to let its miners fall by the wayside despite the turbulent environment and is desperate to ensure competition to the likes of Vale, BHP Billiton and Rio Tinto remains robust.
The tax changes are, however, unlikely to eradicate the red ink currently tarnishing the balance sheets of Chinese-based miners.
The muted action on iron ore markets carried through to stock markets as BHP edged down 0.1 per cent in London trade, while Rio gave up 0.3 per cent, largely in line with the fall seen by the broader FTSE 100 index.
Closer to home, Fortescue enjoyed a strong trading session on Wednesday, surging 8 per cent. Smaller rival Mt Gibson Iron ended flat, while BC Iron lost more than 9 per cent despite a rising broader market.
Source: The Australian
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