Iron Ore Sees Gains 2016 - February 2016

Iron Ore Sees Gains in 2016 February 2016 Iron ore markets, which has seen considerable fluctuations in price and demand, are finally back on the rise in 2016. After hitting a low of $37 per ton last year, iron ore prices rose to $45.60 this month. This increase of more than 20% from the low defines the iron ore market as having left behind the troubled situation it was in and firmly planting itself back in a bull market.

The increases are attributed to the closures, both temporary and permanent, of various mining ventures around the world, including the Samarco mine and Port Hedland. However, analysts do not believe this increasing trend will remain for long. As China’s government pushes towards intentions of reducing the country’s dependence on steel consumption in heavy industry, global demand of iron ore will be expected to drop. Also, although some companies like Anglo American are leaving the iron ore industry, others are continuing plans for expansion of their current operations, including Vale, Rio Tinto, and BHP. These combined factors might result in a renewed global oversupply situation that will result in decreased iron ore prices, thus dropping the current gains trend.

Hope lies with the continued bull market trend for iron ore, a view that could perpetuate itself with market confidence leading to increased buying and selling strengths with investors. Confidence in a bull market for iron ore can lead investors to increase securities buy and reduce desires to sell and this is the approach that could affect the market in the long‐term.