Iron ore price rallies on record-breaking China steel output

Iron ore restocking continues ahead of the Lunar New Year. Stock image.

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Iron ore prices continued to climb on Monday as data revealed record-breaking steel production numbers in China, which forges more steel than the rest of the world combined.

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China (CFR Qingdao) were changing hands for $174.07 per tonne, setting a new near-decade high.

Year-to-date, the steelmaking raw material has enjoyed 8.5% gains after an 80% rise last year. The benchmark hit an all-time high of $191.70 in February 2011.

The high-grade Brazilian index (65% Fe fines) also advanced to a near record high of $195.30 a tonne, after rising about 78% over the past year.

Iron ore’s stellar run was largely due to the rising industrial demand from China. Last year, the country produced a record 1.05 billion tonnes of steel, a breakthrough as it is the first time the 1 billion mark has been exceeded.

Customs data last week showed that China imported 1.17 billion tonnes of iron ore, beating its previous record of 1.075 billion tonnes in 2017 despite a decline in December shipments.

However, iron ore may lose steam in 2021 on recovering supply from top exporters Australia, Brazil and South Africa, as early signs that Chinese steel output is likely to stabilize this year, according to industry analyst Clyde Russell.

China’s steel demand is likely to rise moderately this year, and probably not by more than the supply of iron ore can keep up with, Russell said.