Following another rise in prices overnight, iron ore is now officially in a bull market.
According to Metal Bulletin, the benchmark 62% fines spot price climbed a further 3.8% to US$64.71 a tonne last night.
This means the base metal is trading at its highest level in almost two months and is up 21% from the one-year low of US$53.56 a tonne it set in the middle of the month.
Lower grade iron ore also climbed overnight. The spot price of the 58% fines increased 2.3% to US$43.17 a tonne.
Although in early trade the Fortescue Metals Group Limited (ASX: FMG) share price and the Rio Tinto Limited (ASX: RIO) share price have fallen, they are both up sharply over the last five trading sessions.
The same can be said for the shares of junior iron ore producers Atlas Iron Limited (ASX: AGO), Mount Gibson Iron Limited (ASX: MGX), BC Iron Limited (ASX: BCI), and Grange Resources Limited (ASX: GRR).
Where next for iron ore?
Opinion is largely split on the future direction of iron ore. In one corner you have the bears that think that increased supply and growing stockpiles will weigh heavily on prices moving forward.
Then there are the bulls that believe that the insatiable Chinese appetite for the base metal will drive prices higher over the next few months.
I'm more inclined to side with the bears at this stage. Because of that I'll be staying away from Fortescue and its peers no matter how tempting they are at current prices.
But if you are bullish on iron ore prices, then Fortescue could prove to be dirt cheap.
