Iron ore prices rose to a fresh five-year high on Tuesday, driven by stronger Chinese steel demand and lower supply from the largest producers, Brazil and Australia.
The price of the steelmaking raw material jumped by 5 per cent to hit $126 a tonne, according to S&P Global Platts. It has risen by over 70 per cent this year.
Steel prices in China have rallied this month following government-ordered cuts to production in the city of Tangshan in a bid to reduce pollution.
At the same time, supply of iron ore from the traditional suppliers of Australia and Brazil is set to decline. The Australian government cut its forecast for iron ore production this week due to bad weather.
The Australian Department of Industry, Innovation and Science said it expects exports of iron ore to be 814m tonnes, down from an earlier forecast of 867m tones.
In Brazil, production has also been impacted by the collapse of a dam in Brumadinho in the state of Minas Gerais in January.
Iron ore is a key source of profits for some of the world’s biggest miners, a group that includes Anglo American, BHP Group, Rio Tinto and Vale.