After a tumultuous year, majority of mining industry ends 2016

02 January 2017

From companies to investors to governments and the commentariat, the rise in the price of iron ore caught many off guard.

Massive volumes of the steel-making ingredient have been coming out of Western Australia as well as our main rival, Brazil.

But the normal supply and demand equation was thrown out the window when in one night alone it rose a spectacular 19 per cent to $US83 tonne.

That is a far cry from the $US38 it was fetching at the end of last year, and there have been warnings it is as much to do with trading machinations than true demand.

But it has bounced around in that range for a couple of months now, as of today it is worth $US74 tonne.

But market watchers and investors remain wary. Even Federal Treasurer Scott Morrison said the Government was not basing its budget around a sustained high price.

And the head of Fortescue Metals Group, Andrew Forrest, agreed.

“I think all of us, in our hearts, knew that price wasn’t sustainable,” he said.

“I think 2017 will have a lot of bumps in the road for the iron ore industry, the price will continue to fluctuate and there is a lot of supply still coming on from Brazil.”

Source – ABC