Iron ore surpasses the psychological level of $ 70 per ton

A good start for iron ore in the second half of July and a rise above $ 70 /t is likely to fade at the end of the year as demand from the main buyer, China, slows and global mine reserves remain robust, according to experts from Sucden Financial Ltd. and Bank Julius Baer & Co.

“Any significant surge in maritime traffic towards the end of the year and a gradual increase in demand will lead to lower iron ore prices as we view this recent surge as transitory,” said Kash Kamal, an analyst at Sucden Financial. According to him, prices will average around $ 60.

The rebound in raw materials after falling to $ 50 in mid-June is fueled by signs of stronger-than-expected demand in China, the world's largest steelmaker. Alloy output from factories in the country rose to a record high in June as steel prices rose, supporting the profits of producers and miners including the Rio Tinto Group and BHP Billiton Ltd.

While the resilience of China's economy in general and construction activities in particular is supporting iron ore and steel, demand should decline, according to Bank Julius Baer & Co, which predicts iron ore will return to $ 55 per tonne through three months and up to $ 50 after 12 months. “We see that the iron ore market is excessive and do not believe that the recent rebound is sustainable,” the bank said.