Analysts have warned iron ore prices could spike to a five-year high of more than $100/mt in the coming days as lower supply following the Vale disaster in Brazil affects the market. Vivek Dhar of Australia's Commonwealth Bank said the short supply could last up to six months, while near-capacity Australian miners Rio Tinto, Fortescue and BHP Billiton would be unable to fill the gap. The price of iron ore, which is used for steel making and other industrial applications, has fallen by about 30% since mid-June, when it hit its highest level on record.
Analysts have warned iron ore prices could spike to a five-year high of more than $100/mt in the coming days as lower supply following the Vale disaster in Brazil affects the market. Vivek Dhar of Australia's Commonwealth Bank said the short supply could last up to six months, while near-capacity Australian miners Rio Tinto, Fortescue and BHP Billiton would be unable to fill the gap. Dhar said the reduced output presents a potential risk to investors if Chinese steel producers decide the current cost of iron ore is too high to increase production for the construction season.