The price of iron ore has rebounded above $US50 a tonne in offshore trade as second quarter growth in China came in above market expectations.
At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US50.10 a tonne, up 1.4 per cent from $US49.40 a tonne.
The commodity is now 13.6 per cent above last week’s 10-year low of $US44.10 a tonne, which came as stocks in Shanghai tumbled and steel prices slumped to a 12-year nadir.
Much of the bounce has been related to steadier stock market action in China, though investors in the most recent session seemed more inclined to focus on robust growth data out of China than the 3 per cent drop in stocks.
The 7 per cent lift in growth for the second quarter married with Beijing’s projections for the full-year, but took many by surprise given signs of a slowdown in the world’s second largest economy.
The positive reading allowed the iron ore market to shrug off data released around the same time that found crude steel production in China dipped 1.3 per cent in the first half.
The positive session may also be a reaction to a move from Vale to trim production at its higher-cost mines by 25 million tonnes from this month.
However, while the Monday decision was welcomed by many in the market, most foresee it having a limited impact given the mining giant retained its full-year supply target of 340 million tonnes.
Source: Business Spectator
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