Iron ore bounce expects to be short lived

Author: Paul Ploumis09 Jan 2015 Last updated at 04:58:01 GMT

WASHINGTON (Scrap Monster): But the year year 2015 seems to be fair for the commodity as the metal, hiked 8 percent in the beginning of the year. The question is, whether it’s a false sign of promise, or is it the start of a new phase of the metal, with the recovery in its price, which was recently at five years lowest 65.50 dollars per tonne.

Only a few number of miners are convinced that, the hike in the value of the commodity will last. Most of the analysts have commented on the matter that, the reason for the sudden hike in the price of the commodity is the restocking by the Chinese mills, in order to fulfil the requirements of Chinese banks in the new year. There are chances that the supply of the commodity will still continue to increase, and the demand for the metal in China, also seems to be weak, and the forecast on the value of the metal in the current year is near to 50 dollars per tonne.

This news can turn out to be a bad one for the giant iron ore miners like, BHP Billiton, and Rio Tinto, as well as for Vale, the iron ore miners who have spent billions of dollars on expanding their production of the commodity, and consumed almost all the profit from the steel making raw material last year.

According to the analysts, even though now the value of the commodity is hiking up, an increase in the value of the commodity is accomplished, but how long will it stay, the demand is still low but the supply provided by the large iron ore miners are still on, and higher than before.