Will the iron ore price resurgence last?

The price of iron has almost doubled since a December low of $38 a ton to around $70 in quick time, although market analysts are warning mining companies that the resurgence may not last as long as they hoped.

Large iron ore producers such as BHP Billiton have revised profit forecasts as margins widen, a big sigh of relief after periods of value decline.

However, experts are predicting that the current price may be as good as it gets, pointing towards the seasonality of the iron ore sector. Big markets including Australia, Brazil and China are all coming out of seasonal climatic difficulties caused by monsoon rains/storms in the southern hemisphere and a harsh winter in China.

According to ABC news in Australia, UBS commodity analysts have said: "For now commodity exposed miners are breathing a little easier. But for price upside to be sustained, better underlying demand is needed.

"There have been green shoots in China's property market, infrastructure activity has lifted & policy makers have signalled a more pro-growth stance. But we are yet to be persuaded and await further evidence before adopting a more positive stance."

The recent surge in Chinese demand is largely debt-funded, which could lead to larger problems in the medium-longer term. Other analysts warn of a massive iron ore surplus if demand for steel drops after the expected Chinese summer building boom. 

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