Iron ore is higher

MandatoryCredit: Clive Mason /Allsport

The iron ore price is higher.

According to Metal Bulletin, the spot price for benchmark 62% fines rose by 25 cents, or 0.64%, to $39.43 a tonne.

Like spot, Chinese iron ore futures rose modestly overnight with the most actively traded May 2016 contract on the Dalian Commodities Exchange rising 0.17% to 294.5 yuan.

If sustained today it points to the likelihood of another gain in the spot price this evening.

Analysts at Metal Bulletin suggest declining iron ore production in China may have contributed to the modest bounce in prices.

“Perhaps contributing to the improved sentiment was news that China’s domestic iron ore production continued to shrink in November, with volumes down 7.5% year-on-year amid record-low prices,” they wrote.

“The country’s run-of-mine (ROM) output totalled 117.5 million tonnes last month, according to the latest data from the National Bureau of Statistics (NBS). Volumes are also down more than 6% from levels in October, indicating a continued displacement of less cost-competitive ore from the market.”

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