But “all good things come to an end”, said Deloitte’s Mr Sanders, who pointed out that the seaborne iron ore price recently experienced its steepest monthly decline in more than eight years.
“The forces that pushed iron ore to $US122 a tonne in mid-July – China’s steel production and tightness in the iron ore supply chain – are simultaneously unravelling,” he said.
“With miners warning on 2020 price outlook, iron ore is exhibiting all the elements of a failed souffle, promising the world but ultimately falling flat on closer inspection.”
Falling about 30 per cent from its previous peak, the iron ore price has dipped back below $US90 as supply begins to stabilise and the ongoing US-China trade war weighs on the economy of China, which makes about half of the world’s steel output.
Rio Tinto chief executive Jean-Sebastien Jacques last week said he remained the “optimist in the room” on the chance of an imminent resolution to the tariff war between the two superpowers that has been rattling world markets and casting a cloud over the outlook for global economic growth.
“Everybody understands it is in the interests of everyone to find a solution to the current challenges,” Mr Jacques said.
“Lots of discussions are taking place, as far as I understand. I have no doubt it will be resolved – and the sooner the better.”
Industry analysts will be closely watching the pace of global iron ore supply growth as Vale restarts production in Brazil as well as demand trends out of Chinese factories amid concerns of a slowdown in the country’s property sector and economic headwinds from the trade war.
Vivek Dhar, a mining and energy commodities analyst with the Commonwealth Bank of Australia, said the disruptions that have dogged the iron ore market had subsudied, leading to prices falling amid an improved supply. Although there was the prospect of a US-China trade deal, it has not yet “moved physical demand”, he said.