Iron ore prices rose on Wednesday as demand in China propelled spot prices of the metal to the highest in more than a week, despite renewed steel production controls in Tangshan city.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $124.89 a tonne during morning trading, up 1.4% compared to Tuesday’s closing.
The most-traded May iron ore on China’s Dalian Commodity Exchange ended daytime trading 2.1% higher at 694 yuan ($108.94) a tonne, rising for a second consecutive session. It touched 696.50 yuan earlier in the day, its strongest since December 27.
Restocking demand for iron ore and steel overshadowed a pollution warning in the steel hub Tangshan city in Hebei province, which requires steel mills to curb operations.
China is expected to keep output restrictions in place to ensure smog-free skies as it hosts the 2022 Winter Olympic Games in February, with some events to take place in Hebei.
“We expect more restrictive policy in the property (sector) will depress steel demand, with quotas for emissions intensive industries, specifically steel,” J.P. Morgan analysts said in a note.
“We predict 2022 will be a watershed year, with seaborne iron ore supply growing but China iron ore demand contracting.”
“Iron ore demand will broadly, gradually decline,” said CITIC Futures Co. analyst Zeng Ning.
“The property industry is rather weak, steel consumption is likely to contract and more mills will use scrap to reduce emissions.”
UBS Group AG expects iron ore to average $85 a tonne in 2022, while Citigroup forecasts $96 a tonne. Capital Economics predicts $70 by the end of next year.
Related read: Top iron ore stories of 2021 and what to expect in 2022
(With files from Reuters)