(Australian Associated Press)
Shares in some of Australia’s major iron ore miners have soared after prices for the steel-making ingredient surged more than 10 per cent over the past two days.
Rio Tinto and Fortescue Metals Group are trading at their highest levels in three and six years respectively, with iron ore at $US91.85 a tonne.
That’s the most it has cost in nearly two and a half years, driven by hopes of improving demand from China’s steel industry.
Prices for iron ore – Australia’s top export revenue earner – slumped to a decade low of $US38 a tonne at the end of 2015, but more than doubled in value during 2016 on improved Chinese demand.
Prices have continued to rise in the new year, with the latest surge fuelled by preliminary Chinese trade data for January, which last week indicated a strong rise in iron ore imports.
Earlier this month, Rio Tinto chief executive Jean Sebastien Jacques said he was upbeat on the short term outlook for the commodity, with the Chinese government’s stimulus packages for its steel and housing sectors expected to continue for some time.
The recent price spike is expected to boost profits for the major miners, who have used the price slump to slash costs and capture dominant market share.
By 1430 AEDT, Rio Tinto gained one per cent to $68.99, its highest level since early 2014. Smaller rival Fortescue Metals added 1.7 per cent to $7.0 a share, its highest level since August 2008.
Shares in BHP Billiton, which rose to a 18-month high of $27.89 in late January, added as much as one per cent in early trade before slipping marginally lower to $26.43.