Spot iron prices are up to an almost 15-month high at $153.90 per tonne. The rally in prices, which started in December 2012, is mainly due to China's rebuilding of its stockpiles as the Asian giant gears to boost its economy, which in turn, could improve steel demand.
Data from the Steel Index said the benchmark iron ore price with 62 per cent iron content went up 0.4 per cent on Monday at $153.90, the highest level since Oct 14, 2011.
Since iron ore prices tumbled down to a three-year low in September 2012 at $87, prices of the key ingredient in producing steel has rebounded 77 per cent.
Besides the speculative buying of iron ore in the open market, Jamie Pearce, head of iron ore broking at SSY Futures, explained the improvement in price of the commodity to slower domestic production of iron ore in China, particularly in its northern region, due to winter and to limited entry of spot cargoes from Australia, Brazil and India.
Chinese mills continue to build up their stockpiles at major ports since current inventory has gone down to less than 80 million tonnes from 90 to 100 million tonnes for the greater part of 2012.
A Singapore trader forecast that benchmark 62 per cent iron ore price could jump to $170 in the near term.
Baosteel, industry trendsetter in China, said it would boost prices of hot-rolled coil mainly used for manufacturing by $25.80 a tonne in February and by 120 yuan a tonne for cold-rolled coil used for car manufacturing.