The price of iron ore has surged clear of the $US50 mark in offshore trade, climbing almost 4 per cent as its recovery from a 10-year low continues apace.
At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US51.90 a tonne, up 3.8 per cent from $US50.00 a tonne.
The commodity has risen almost 18 per cent in less than two weeks after it struck a 10-year low of $US44.10 a tonne as panic briefly set in on a temporary collapse on the Shanghai stock market.
There has been no single catalyst for the recovery, with half of the gains coming in the first day after the 10-year trough was reached — a sign traders saw the fall as an overreaction.
However, more sedate action on the Shanghai exchange and signs leading producer Vale may be willing to trim production have aided the rebound.
The jump clear of $US50 a tonne will be welcomed by the sector as most mid-tier and junior miners are marginal, at best, below $US50 a tonne, with Vale, Rio Tinto and BHP Billiton the only able to turn a significant profit at such levels.
The development comes after Atlas Iron yesterday revealed it had raised $86 million by issuing new shares, well short of its $180m target as investors shied away amid the recent pressure on ore prices.
The embattled group almost went under in April but was able to secure a deal with creditors that has seen its three mines restart operations.
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