The spot price for iron ore is currently close to the magic mark of $ 100 per ton, and on April 3 it reached $ 92.15 per ton, reaching the highest level in the last two years, according to the data provider Market Index.
However, it is still far from the prices of the boom, close to $ 185 per ton, during the peak of China’s construction super-cycle between 2010 and 2012.
While China has industrialized and built new urban megacities at breakneck speed, over the past 30 years it has raised the economy of the “Happy Country” from scratch due to the insatiable demand for iron ore as a major component for the production of steel needed to strengthen concrete structures.
In fact, the recent tax breaks granted to almost every Australian in the budget for this week in 2019 are largely supported by a swollen state treasury thanks to rising royalty for iron ore mining.
Regular taxpayers benefit only marginally from iron ore price increases, although compared with investors in companies such as BHP Billiton Limited (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) and Grange Resources Ltd (ASX: GRR). All their shares have risen over the last year.
China reported some stronger-than-expected production data this week, and the price of iron ore is usually considered a measure of the strength of the Chinese economy.
However, this is a shortage of supplies from Brazil, the second-largest producer of iron ore in the world, which reportedly causes iron ore prices to rise in 2019.
The shortage is the result of an accident at the tailings dam, which killed more than 300 people, and the Brazilian miner Vale SA is currently limited in production due to safety concerns.
No one knows how the price of iron ore will rise in the medium term, but in the short term there is no reason why it cannot rise higher.
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