What Chinese slowdown? Iron ore price closes in on 3-month high
The iron ore price jumped again on Wednesday as the steelmaking raw material builds on gains above $130 a tonne, levels last seen in April.
The benchmark import price of 62% iron ore fines at China's Tianjin port climbed $0.20 to trade at a 12-week high of $132.10 a tonne according to data supplied by The Steelindex.
Recent strength in the iron ore price comes on the back of an improvement in China's steel industry which consumes 65% of the 1.2 billion tonne a year seaborne trade.
China produces steel at almost the same rate as the rest of the world combined and projections are for record-breaking output of 790 million tonnes in 2013.
Persistent overproduction and woeful profitability has prompted authorities to once again introduce measures to cut the industry down to size with the Ministry of Industry and Information Technology saying Wednesday iron and steel was top of the list.
Steel prices were also buoyed by speculation that China may do more to stimulate its slowing economy with railway spending receiving priority.
News that the $106 billion originally scheduled on railway construction this year will be topped up on Wednesday helped Shanghai rebar, the most actively traded steel futures contract worldwide, hit a 3-month high of 3,694 yuan ($602) up 4.5% in July and recovering strongly from 2013 lows of $558.
The relatively rosy outlook for the iron ore and steel industry comes despite Wednesday's worse than expected manufacturing and employment numbers for the world's second largest economy.
China's flash manufacturing PMI index which measures levels of economic activity among small and medium businesses, fell again in July to hit an 11-month low.
The employment index also fell and is now weakest since March 2009, the height of the global financial crisis.
Iron ore has also held up better than other industrial metals and minerals.
Copper, often thought to be the best barometer of the health of an industrialized economy, is down 11% in 2013, zinc is down just short of 10%, nickel has dropped almost 20% compared to a retreat in the iron ore price of 8.8%.