Iron ore put in a bottom around Christmas and news on January 6 that inventories of the metal at Chinese ports had fallen to an 11-month low gave some hope that the move back above $70 a tonne might be sustainable.
Indeed, local iron ore miners like BC and Atlas Iron, Arrium and Fortescue Metals saw big percentage increases in the price of their stock with Atlas and BC Iron up around 100% from recent lows at one point.
But the price action into the end of last week will have miners and traders who might have been turning bullish on ore a little rattled this week.
On Friday, the March contract for 62% Fe, iron ore swap futures fell $1.03 to $68.88 a tonne. That’s down from last week’s high of $70.88 on January 6 when the Chinese inventory news broke.
Technical traders will look at the chart of the first two weeks’ trade this year and see a double top over the short term around $71 a tonne within an overall pervading downtrend.
It sets up more bad news for iron ore prices and the miners. But then again, the Government’s MYEFO expectation is for iron ore to fall to $60 a tonne and stay there for two years, so it’s priced in.