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Print[ferro-alloys.com]The data provider Steel Index says the rise is on the back of heavy steel re-stocking in China, fuelled by an improvement in its property sector.
Prices reached US $141.80 a tonne.
Philip Kirchlechner says there are a complex array of factors driving the price rise which did not happen overnight.
"Steel mills in China are a huge factor in iron ore demand, stocks have been fairly low, about 20 days worth of supply, whereas typically steel mills are 30 to 40 days, so they have been running low.
"Often steel makers run them down to try and avoid purchasing iron ore in the hope prices are coming down, they haven't and therefore they're getting caught short, and that causes buying to increase again and the price to spike."
He says this time the steel mills appear to have got their calculations wrong.
"It's a question of having enough buffer and that's not always easy to plan because asiron ore prices are much more volatile than they used to be, Mr Kirchlechner said."
"Steel makers are trying to watch their costs and they're trying to time purchases in a way that they can minimise costs but, by doing that, they sometimes miscalculate and end up with too less of a buffer."
Patersons Securities' Rob Brierley says other factors have also played a part.
"I think China hasn't stocked up as much as it has in the past, it's running a leaner inventory system, [and] there's been a lot of wet weather in Brazil which has impacted on production from Brazil," he said.
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