(MENAFN - ProactiveInvestors - Australia) Iron ore miners appear set for a sustained bull run as iron ore prices resurge - after declining five straight months - on the back of strong Chinese growth and falling inventories.
Fortescue Metals Group (ASX:FMG) was the first to acknowledge the upswing, saying it would dust off its Kings deposit next month as prices stabilise.
Benchmark prices for iron ore landed in China last week raced to a five-month high of US135.50 a dry ton, up 56% from a low of US87 a ton in early September even though prices are down on a year-on-year basis.
Analysts point out that the macro economic sentiment in China, which is forecast to grow 8% this year, coupled with low inventories and lacklustre domestic production from Chinese mines were supporting prices.
Iron ore inventories in China were at two year lows as higher demand pushed up prices. Stockpiles at China's major ports dropped 3.3% to 71.32 million metric tons as of 21 December 2012.
Chinese customs data also showed ore imports reached 65.78 million tons in November, the second highest level after a record 68.97 million tons was imported in January 2011.
Meanwhile, Fortescue will resume work on its Kings deposit next month, which if realised, will bump up the company's production capacity by 40 million metric tons a year when the mine starts next December.
It would take Fortescue's total capacity to 155 million tonnes a year, and make the company account for about 50% of the growth in iron ore supply next year.
Fortescue shares ticked up 4% or 0.18 to trade at 4.53 a share, while Atlas Iron (ASX:AGO) was up 3.3% and added 0.06 to its share price of 1.73.
Atlas has made an almost 22% gain in the last month adding 0.31 to its share price, while Fortescue has risen 17.4% in the last month.