Singapore — Iron ore just will not back down. Prices have advanced to near the highest level in more than two years as speculation of sustained Chinese demand for imports outweighs repeated warnings from analysts that the rally is overextended and will unravel. "The latest price gains are not sustainable," said Caroline Bain, chief commodities economist at Capital Economics, describing the recent advance as very speculative in nature. "It seems likely that it is premised on optimism about demand after the new year holiday," Bain said, referring to the Chinese Lunar New Year which falls at the end of this week. The raw material surged last year as stimulus in China supported steel production, buttressing record demand for imports as local mine output fell. Citigroup has said part of the explanation for recent strength may lie in a shortage of higher-quality ore, which has been hard to come by, even as overall seaborne supplies rise. Among those sounding warnings about weaker prices f...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.