Iron ore climbs to highest level since May

Iron ore miners are set for a good day on the market following the resource’s 1.24% climb to US$122 per tonne overnight to its highest level since May, according to The Steel Index.

Yesterday, a number of the commodity’s miners surged, as steadily increasing prices are giving investors confidence that there are, indeed, still gains to be made. Pure iron ore miners Atlas Iron (ASX: AGO) and Fortescue Metals Group (ASX: FMG) saw impressive gains of 9.9% and 6.8%, whilst heavyweights BHP Billiton (ASX: BHP) and Rio Tinto (ASX: RIO) increased by 0.55% and 1.3%, respectively.

Despite its recent spur however, a number of analysts have lowered their forecasts for the commodity in the short to medium term, believing that current demand is predominantly coming from Chinese mills restocking inventories. National Australia Bank has set its price at US$100 for 2014 whilst Australia’s Bureau of Resources and Energy Economics (BREE) estimates it will sit at around US$112.

Today, BHP, Rio, Fortescue and Atlas are up 1.92%, 2.15%, 3.94% and 2.4% in early trading, respectively.

Foolish takeaway

The mining sector has been largely avoided by investors in recent times as Chinese growth continues to slow down. The volatility will remain high for some time yet, but as heavyweights fall lower and lower, they may be good options for long-term investors. For the meantime however, it is best to remain on the sidelines for more attractive entry points.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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