Iron ore soars past $80 a tonne

Iron ore prices continued to rally on Friday, trading above the $80 a tonne level, even after falling $0.12 per tonne overnight.

The import price for 62% iron content fines at the port of Qingdao was at $81.66 a tonne, data from The Metal Bulletin Index shows, which means that — year to date — the price of the steelmaking raw material is up 85% or more than double its price of December 2015.

The rally has been largely attributed to strong infrastructure investment in China, as well as the country’s slowdown in supply growth, following Beijing’s decision to close 100 – 150 million tonnes of steel capacity through the end of the decade to increase profitability of remaining producers and tackle pollution.

Authorities are also pushing for consolidation of steel producers with a target of 60% market share for the top 10 steelmakers, which should translate into higher prices for steel, iron ore and met coal.

Soaring iron ore prices are also a result of increased demand from China, which according to official figures released Friday, reached 80 million tonnes in October, 7% more than in the same month last year.