Records were shattered by iron ore producer Fortescue Metals Group and Rio Tinto as shares traded at a 12-year high on an incredible rally in the iron ore commodity price that puts it back at levels unseen since the end of the super-cycle.

Iron ore surged as Brazilian producer Vale downgraded production at a time when Chinese demand is strong and port inventories are being run down as Beijing invests heavily in infrastructure as part of its economic recovery plan.

The spot market price for iron ore advanced $US4.16 or 3.1 per cent to $US136.29 on Wednesday, the latest date for which data is available, according to Fastmarkets MB’s measure of 62 per cent grade ore. That’s the highest since 2013.

The Australian dollar jumped to US74.20¢ on Thursday morning, a fresh 27-month high for the currency, which is riding the expectation of a strong final quarter of economic growth and sound start to 2021 having bounced out of recession. The S&P/ASX 200 Index closed 25.1 points, or 0.4 per cent, higher at 6615.3.

“Right now, the Australian economy looks like it’s starting to overtake the US economy in terms of its relative growth rate,” said Tim Toohey, Yarra Capital Management’s head of macro and strategy.

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