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Chinese hunger for iron ore is back…for now (VALE, ACH, FCX)

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Iron prices have been on a two-week rally -- their longest uninterrupted climb in history -- as Chinese steel mills come back as extremely eager buyers. Some are nervous, but the chart does not lie.

China stepped away from the market a few months ago and destroyed it, but has now re-emerged as a big buyer.

Since bottoming out at the end of October, iron ore spot prices are up 26% to $147 a ton.

And this is with a record amount of ore warehoused in Chinese ports, so if there is a long-term oversupply issue , it is currently being more than balanced by strong demand.

We have seen this same pattern play out in copper, coal and even aluminum. If it continues, it might lend a boost to the iron miners -- BHP Billiton ( BHP , quote ), Vale ( VALE , quote ), Rio Tinto ( RIO , quote ) -- as well as copper names like Freeport McMoRan ( FCX , quote ) and aluminum producers like Chalco ( ACH , quote ).

One interesting factor: local traders say a lot of this is simply speculators hedging their October losses. We might see currently robust Chinese steel production topping out for awhile, in which case new shipments can only push ore prices down from these recent peaks.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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