10 December 2019 - 18:41Iron ore’s surprise surge above $90 a tonne amid optimism on the outlook for Chinese demand has sowed consternation among market watchers, with some questioning the move as prices fluctuated on Tuesday.
Earlier in 2019, prices blasted to multiyear highs after a major supply outage in Brazil, before retreating on signs of higher shipments. The recent spike came amid pledges from China’s leadership to strengthen key infrastructure spending. Investors have interpreted a recent Politburo statement on the economy as bullish for infrastructure, said Guttierez.
“We’ve definitely seen some less-worse data come out from China and that’s precipitated a bit of a bounce,” said Daniel Hynes, senior commodities strategist at Australia & New Zealand Banking Group. “The upside does look limited from here, though. There’s not much sign of any meaningful pickup in demand over the longer term.”
Since the supply shock in the first half that lifted iron ore far above $100, global production has recovered, including from leading miners in Brazil and Australia.