The market for iron ore has in decline since 2011 amid an extended commodities crash, but things may be turning the corner for the steel-making commodity.
How strong the recovery will be, however, remains uncertain. The world's biggest iron ore producers have maintained their output guidance for 2016, as China 's appetite for the commodity firms, but supply growth is unlikely to return to old highs anytime soon.
On Thursday, Brazilian iron ore giant Vale (Sao Paulo Stock Exchange: VALE'A-BR) gave an encouraging outlook in its second-quarter results announcement, noting a rise in global steel production, which it said grew 6.1 percent on-quarter in Q2. In China alone, steel production growth was 9.2 percent in that period.
"Steel demand improved in China, supported by the credit easing started in 2H15," Vale said.
"Investments in the housing sector increased while investments in infrastructure remained stable in 1H16. The higher steel demand boosted prices and encouraged worldwide production."
The world's biggest producer expects higher iron ore supply in the second half of the year, on the back of seasonal factors.
Last week, Vale reported 86.8 million metric tons of production in the second quarter of 2016, just slightly below the 89.3 million ton record it set in Q2 2015.
Vale's assessment came after investment bank Goldman Sachs on Wednesday raised its three- and six-month iron ore price forecast to $50 and $40 a ton respectively, from $45 and $35 a ton, due to low steel inventories and a fall in the Chinese yuan (Exchange: CNY=) against the dollar.
"The most important channel, in our view, is the market interpretation that CNY depreciation signals upcoming credit easing," wrote Goldman analysts.
Credit easing in China would boost lending and economic activities such construction.
The improved market outlook is a turnaround from December when spot iron ore prices hit all-time lows around $37 a ton. Prices have since rallied on increased building activities in China, the world largest iron ore consumer, and were trading around $59 a ton on Friday.
China said in May it planned to invest 4.7 trillion yuan ($720 billion) on 303 transport infrastructure projects over three years.
Reports from Australian miners Rio Tinto (London Stock Exchange: RIO-GB) and BHP Billiton (London Stock Exchange: BLT-GB) also showed production this year largely on track. Rio Tinto said last week that the company was on target to meet production guidance for the full-year 2016, while BHP said it missed its own iron ore guidance narrowly due to the Samarco dam disaster that shut down the Brazilian mine.