Many commodities have watched their prices drop, but iron ore is one exception; its price has surged to levels not seen since 2014. The price of iron ore, the main ingredient of steel, is being propelled upward by the combination of growing shortage and intensifying demand. Devastating circumstances affecting the world’s top producers, Brazil and Australia, along with booming demand in China are mainly to blame for the supply shortfall.
Traditionally, banks have provided up to 80% of the financing for the trading of commodities worldwide. However, since the financial crisis, an increase in regulation and accountability has forced many banks to repair their balance sheets, tighten their credit policy and adhere to a more punishing regulatory environment.