On a positive day for the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO), shares in BHP Billiton Limited (ASX: BHP) have jumped 38c or 1.1% early in the session. The shares are now trading at $36.33 after threatening to fall below $35 apiece just last week.
The stock has ranged between a low of $30.43 and a high of $39.79 over the last 12 months.
The stock's upward movement this morning has likely been the result of the iron ore price strengthening by 1.5% on Friday night to US$92.10 per tonne. While that figure is still nearly 32% below the commodity's average price throughout 2013, the small jump would have provided a boost of confidence for investors in the sector.
Fortescue Metals Group Limited (ASX: FMG) and Rio Tinto Limited (ASX: RIO) have also benefited from the news. Fortescue is up 3.8% and Rio Tinto has gained a little over 2% while smaller stocks like Arrium Limited (ASX: ARI) and Atlas Iron Limited (ASX: AGO) have jumped even further, up 4.5% and 3.9% respectively.
However, while the commodity's price increase is sure to bolster the stocks in the short term, I believe iron ore will continue to fall in value over the coming 12 months. After all, while the miners are heavily ramping up their production levels, demand growth from China continues to slow down substantially. As such, right now does not appear to be the ideal time to be buying iron ore stocks.
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