Iron ore price at 16-month high as Chinese stockpiles drop to 3-year lows
The benchmark CFR import price of 62% iron ore fines at China's Tianjin continued to climb on Wednesday, reaching $158.90, the highest since mid-October 2011.
The steelmaking ingredient has been boosted by restocking by Chinese steelmakers – responsible for more than 60% of global consumption – and a draw down of inventory at the country's ports.
Stockpiles of iron ore fell to a 3-year low this week of 66.8 million tonnes, down from highs above 100 million tonnes last year.
China's daily crude steel output rose 4.6% over the first 10 days of February to just under 2m tonnes per day.
Number 3 producer of iron ore BHP Billiton said in its results presentation yesterday that customer inventory cycles are now significantly impacting the market price:
However, the company also warned that the cost curve for iron ore will flatten as substantially more low cost supply is under construction meaning prices will revert to mean.