Iron ore prices have rallied over the last two weeks, providing Australia's miners with a chance to catch their breaths following last year's 47% decline.
Although the commodity retreated 0.74% overnight to US$70.96 a tonne, according to data from the Metal Bulletin Ltd, it's still sitting pretty compared to its five-year low of US$66.84 on December 23.
Australia's miners have certainly enjoyed the minor recovery with companies such as Fortescue Metals Group Limited (ASX: FMG) and Rio Tinto Limited (ASX: RIO) having jumped 19% and 12% since their December lows. The nation's higher cost miners, including Atlas Iron Limited (ASX: AGO) and Arrium Ltd (ASX: ARI), have surged even higher, returning 115% and 91% in just under a month. In fact, Arrium has risen 13.7% today alone.
While analysts are still bearish on the commodity's long-term prospects – due to rising supplies coupled with weakening demand – its price could be supported in the short- to medium-terms as Chinese ports begin to restock their inventories. In addition, there has been speculation that the Chinese government is accelerating infrastructure projects this year which could lead to stronger demand.
Despite the recent rally however, the sector remains a speculative bet and long-term focused investors may want to steer clear and instead focus on other compelling investment opportunities.
