Iron ore prices approach $70/metric ton for the first time in nearly six months, driven by China's government-led crackdown on pollution and excess steelmaking capacity.
Fitch estimates China has eliminated 260M metric tons of steel capacity since March 2016, helping to tighten the market and put a floor under prices, and calculates capacity utilization has climbed above 85% from 70%-75%.
Also supporting iron ore prices is China's apparent shift towards lifting short-term economic growth as its prepares for a potentially damaging trade war with the U.S.
On the supply side, ANZ analyst Daniel Hynes expects Australian exports will grow by 16M tons this year, the lowest level since 2006, while Brazilian production will be down for the rest of the year because of the closure of Anglo American's (OTCQX:AAUKF, OTCPK:AAUKY) Minas Rio mine.
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