Overnight also saw mining giant Anglo America cut its iron ore production, which is a significant positive for the Australian majors BHP and Rio Tinto, in our view.
What Happened – Iron Ore Bounce
Iron ore advanced 1.1% to $US46.78 a dry ton overnight, which is the highest since November 16 2015. The commodity appears to have bottomed at $US38.30 in December, the lowest for daily prices dating back to May 2009. Although it is still in the early stages of a recovery, there a number of positive factors assisting with the price bounce.
Overnight Anglo America, one of the largest global iron ore producers, committed to ceasing its iron ore production after the 99-year-old mining company lost US$5.6 billion last year. In the late 2000s, it followed an industry-wide expansion into iron ore to capture China’s booming appetite for steel and piled on debt to pay for it. Anglo has paid the price. It couldn’t compete with its higher-cost operations and US$12.9 billion...
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