Iron ore prices have been the surprise best performing commodity of 2016 so far, up over 80% from its December low of $38.30 per tonne to close to $70 per tonne at the start of this week. According to Credit Suisse the highest level of restocking for 15 years is the major cause of the rebound. However, the influx of private investors into this relatively nascent commodity market has increased the risk that prices overshoot, increasing the potential for a sharp pullback in coming weeks.
So much attention has been focused on the supply side of this market, including reports of a wall of iron ore supply heading to China that the price rebound has come as a surprise. Iron ore prices could have much further to go in the short term with Credit Suisse particularly bullish about the near term prospects [our emphasis].