Iron ore prices surged on Monday, buoyed by renewed optimism over demand for the steel-making ingredient in China.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $123.51 a tonne during afternoon trading, up 3.3% compared to Friday’s closing, its highest since October 21.
Iron ore’s most-active January contract on the Singapore Exchange rose as much as 6.7% to $127.95 a tonne, its highest since Oct. 12.
The most-traded May contract on China’s Dalian Commodity Exchange erased earlier gains to close 1.3% lower at 673.50 yuan ($105.60) a tonne, retreating from a seven-week peak.
China’s rising imported iron ore stockpiles, which last week hit their highest level since mid-2018, and steel production curbs that are expected to be enforced as China aims for smog-free skies for the Beijing Olympics in February, tempered investors’ enthusiasm.
“Analysts expect a rebound in steel output as Beijing’s yearly targets have been met, prompting mills to resume production,” resources sector advisor and broker SP Angel said in a December 17 note.
With China churning out 946.36 million tonnes of crude steel from January-November, down 2.6% from the year-ago period, there is scope for mills to ramp up production as the target is to limit this year’s output to no more than last year’s volume of 1.05 billion tonnes in order to control emissions.
(With files from Reuters)