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SYDNEY, Feb. 13 (Xinhua) -- The major Australian miners have been boosted by the growth in China's economy, along with higher commodity prices, according to data released late Friday.
The Steel Index stated that the price of iron ore jumped 4.6 percent, to now sit at 87 U.S. dollars per metric ton, the highest the commodity has sat since 2014.
The steady increase has buoyed the miners, who were hit by hard times last year when the price of the ore was down to 38 U.S. dollars per metric ton.
The increase in demand from China has risen drastically, after social financing packages introduced by the Chinese government, have fueled a renaissance of sorts for companies like Rio Tinto and BHP Billiton.
Australia's mining giants are heavily reliant on the trade with their largest customer, China, and their success has a knock-on effect that is felt throughout the rest of the Australian economy.
Rio and BHP have used the benefits of this increasing trade, to tighten their own financial controls, and embark on a period of fiscal conservatism, paying down their own net debt positions with a thought towards future operational cost requirements.
But the boom might yet be undone, as private wealth management firm Ord Minett said in a note last week, that although it does forecast the price of iron ore to hold steady for the first half of the year, the outlook is slightly more glum.
"Tight supply-demand conditions are likely to persist through the first half, but iron ore above 80 U.S. dollars per metric ton will eventually incentivise additional supply to come online, which could remove some of the current pricing tension," Ord Minnett said.
The firm predicts that the price of iron ore will slide back down into the 60 U.S. dollar per metric ton region, as global demand in their opinion, begins to slow down.
Some experts think even that figure is too high however, and Liberum Capital analyst Richard Knight told Bloomberg that a price closer to the 40 U.S. dollar a mark per metric ton is likely, as millions of tons of seaborne ore are set to hit the market.
"There's a perception that demand is better than it actually is," Knight said.
"The market, despite the pickup in demand in the fourth quarter is in significant oversupply. And supply is not decelerating, its accelerating this year."
