Jan 11, 2013

If we ride on the back of iron ore, the recovery signs are good

Iron ore prices have staged a remarkable comeback, boosted by a stronger Chinese economy and favourable weather conditions. It could deliver a bigger windfall to Australia than anyone thought.

Glenn Dyer — <em>Crikey</em> business and media commentator

Glenn Dyer

Crikey business and media commentator

One of the questions puzzling Australians and others bearish on China is why iron ore prices have risen 80% in the past five to months or so, including strong gains around the end of 2012 and into the new year when prices jumped by more than 25% alone.

The rise in global iron ore prices has been contrary to all those gloomy prognostications in mid-2012 through to November that Australia’s iron ore boom was over and we faced more pain. Last year iron ore imports ended up 8.4% at a record 743 million tonnes, worth $US95.6 billion. In fact, monthly import levels jumped from around October onwards to December’s records, while prices rose more than 60%.

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