“The iron ore and steel markets have gone berserk – they’ve departed from fundamentals and are heavily driven by sentiment”, China Merchants Futures Co. analyst Zhao Chaoyue told Bloomberg.
The steelmaking raw material was trading at $62.60 per dry metric tonne CFR Tianjin port on Monday, up $10.2o compared to Friday according to data supplied by The Steel Index as Chinese mills scrambled to purchase material on bumper gains in steel prices over the weekend.
This deal was announced as iron ore prices surged more than 18% overnight.
Chinese Premier Li Keqiang also outlined pledges to spend 800 billion yuan ($A164.3bn) on railway construction and 1.65 trillion yuan ($A338.9bn) on building roads.
Large, low-priced producers such as BHP Billiton, Rio Tinto and Vale, have increased production over the past 12 months, despite the price decline.
Australia’s Fortescue Metals (FMG.Australia) said it will enter a joint venture with Brazilian iron ore producer Vale (VALE).
Iron Ore is up almost 70% from its record-low of 38-dollars in December past year.
TSI’s benchmark FOB Australia premium coking coal price hit a five month high of $81 a tonne on Monday a double digit gains since bottoming November 23 at $73.40 a tonne.
Mr Fitzgerald said there were a lot of customers in countries such as South Korea, Japan and China which were looking forward to receiving Roy Hill’s iron ore. Regardless of what Fortescue’s CEO said about yesterday’s share spike, “it is likely to raise concerns with regulators over the disclosure of the deal”, wrote the Australian Financial Review.
The joint venture would allow the two companies to save on supply chain costs by blending selected volumes of iron ore from both… “I remain optimistic”, he said.