Iron ore prices have moved beyond US$100 ($147) per tonne this week, following supply concerns and uncertainty in the iron ore market due to worsening COVID-19 situation in Brazil.
This continues off high prices last week, when the market index reported $US100 per tonne spot prices for the benchmark 62 per cent iron ore that was delivered to China.
Prices peaked last Wednesday at $US108 per tonne, which is the highest price seen for the commodity since October last year.
This sent key iron ore companies’ share prices rocketing up, including Fortescue Metals Group which shot up by 6.4 per cent, or 89 cents, to $14.79 – a staggering 90.59 per cent improvement compared with this time last year.
BHP shares also went up by 3.09 per cent, or $1.07, to $35.71 per share while Rio Tinto rose by 4.10 per cent, or $3.83, to $97.23 per share.
With Australia as the world’s largest exporter and second largest producer of iron ore, the upward trend is a welcome boost to the country’s share market.
Market Index attributed global economic growth as the primary factor in driving supply and demand for iron ore.
“When economies are growing, the need for steel in construction increases, which drives the price up,” Market Index stated.
“Growth in China (the world’s largest consumer of metals) has affected the price of iron ore so much recently that the spot price can almost be considered a proxy for China’s economic health.”