The benchmark iron ore price finally snapped a 14-day losing streak, with today's modest rise potentially marking a turning point the beaten-down sector.
After hitting a multi-year low of $US115 per tonne yesterday, the benchmark iron ore price rose to $US117 per tonne today, ending a horror fortnight in which the commodity slipped about 13 per cent.
Today's rise will embolden analysts who believe there is a “floor” in the iron ore price between $US110 and $US120 a tonne.
That floor is thought to be set by high-cost Chinese iron ore producers, which supply about 30 per cent of China's iron ore demand. China is the main customer for Australia's commodity exports, especially iron ore.
Most Australian companies and investors have long believed such a floor exists, and their investments would be vulnerable if the floor was proven to be a myth.
Fortescue Metals Group was singled out last week as a company whose debt profile was vulnerable should the iron ore price settle below $US115 per tonne for the next 18 months.
Fortescue shares today gained 2 cents, or 0.5 per cent today, to $4.15.
If the iron ore price rebound is sustained in coming days, it will be bad news for notorious American short-seller Jim Chanos. Mr Chanos has inspired a wave of pessimism towards Fortescue based on the notion the company's finances are fragile should iron ore prices retreat below $US100 per tonne.
A similar iron ore price slide last October also came to a halt at $US116 per tonne, after which prices begin to pick up.