Iron ore has held above $US50 a tonne and extended on its recent gains despite bearish talk reaching fever pitch over the past fortnight.
At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US50.70 a tonne, up 1.4 per cent from its prior close of $US50.00 a tonne.
The commodity recently collapsed to a 10-year low of $US46.70, but has bounced amid hopes of stimulus in China and the mothballing of several small mines.
Iron ore gained 6.7 per cent in the last week alone, its best weekly performance of the year so far, with miners desperately hoping for some respite to a bear market that has seen double-digit percentage declines in four of the past five quarters.
However, analysts have tried to outdo each other with predictions of gloom over the past few weeks, with Goldman Sachs delivering a dire warning for hopes of a long-term recovery above the psychologically important $US50 level.
“Our Global Macro team believes that iron ore prices will continue to trend towards $US40 a tonne over the next 18 months as continued new supply and lacklustre demand cause a glut of supply,” a Goldman note read last week.
“Furthermore, we now believe that iron ore prices are unlikely to recover above $US50 a tonne again.”
The pricing activity ahead of the recent bounce has led Atlas Iron to mothball operations in a bid to stave off receivership, Sinosteel to close a mine in Western Australia and seen analysts call for BC Iron to suspend operations should the price fall into the $US30s.
Meanwhile, Fortescue Metals has copped a series of downgrades as several analysts predict iron ore will soon trade in the $US30 to $US40 a tonne range.
Source: The Australian
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