Iron ore shares including BHP had a top run on the market on Friday.
- BHP Group Ltd (ASX: BHP) shares rose 2.7%
- Rio Tinto Limited (ASX: RIO) shares jumped 2.32%
- Fortescue Metals Group Limited (ASX: FMG) shares lifted 2.84%
For perspective, the S&P/ASX 200 Index (ASX: XJO) climbed 0.52% on Friday.
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Why did iron ore shares lift?
BHP, Rio Tinto and Fortescue are all major iron ore producers.
The iron ore China Futures contract has risen 1.2% to US$110.35 on the Singapore Exchange at last look.
Iron ore prices and other base metals lifted amid optimism about China's reopening. China has relaxed restrictions on quarantine and domestic travel.
China is the largest iron ore importer in the world. Iron ore is used to make steel.
News out of the world's largest iron ore producer Vale SA (NYSE: VALE) also appeared to impact iron ore prices. ANZ economist Kishti Sen said in a research note this morning:
Iron ore also gained amid the positive developments in the property sector. This was aided by supply side issues. Vale doesn't expect to get production back to the level it was at prior to the 2019 dam disaster. This year's output will be around 310 mt. It also lowered its 2023 guidance from 325 mt to the same as this year.
As my Foolish colleague Bernd reported today, Citi is predicting the iron ore price could hit US$150 per tonne. Analysts said:
We believe iron ore prices could rally towards $US150 a tonne if China rolls out meaningful credit easing in the next three [to] six months.
However, ANZ commodity strategists Daniel Hynes and Soni Kumari, in a research report yesterday, have a different price outlook. Analysts are tipping iron ore prices to "remain in the range of US$100/t". The analysts said:
The latest measures announced by the Chinese government to support property lending could provide short-term support for the market.
However, a sustained improvement in property sales will be required for steel demand to rise next year. Poor profit margins and winter output curbs continue to weigh on steel productionthrough winter, and subsequently iron ore demand.
Share price snapshot
The BHP share price has risen 32.65% in the last year.
Rio shares have lifted 22.3% in the past 52 weeks.
Fortescue shares have climbed 17.21% in the past year.
