Iron ore prices rose on Monday, extending their gains as improved steelmakers’ margins in China encouraged mills to gradually restart idled blast furnaces and boost imports of the steelmaking ingredient.
Hopes that steel output curbs in China to meet decarbonization goals will be less strenuous in the second half of the year also supported iron ore prices.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $110 a tonne Monday morning, up 2.7%
Iron ore’s most-traded January 2023 contract on China’s Dalian Commodity Exchange ended daytime trade 4.3% higher at 737.50 yuan ($109.06) a tonne.
China’s iron ore purchases in July rose 3.1% from a year earlier and 3% from June as steel margins and prices rebounded and despite concerns over weak steel demand particularly from the country’s ailing property sector.
“It was surprising to see a month-on-month lift in China’s iron ore imports given the ongoing pressure facing China’s steel sector,” said Commonwealth Bank of Australia commodities analyst Vivek Dhar.
Shrinking steel stocks in China, partly because of its policy to curb annual output to limit emissions, are also prompting the resumption of blast furnace operations.
Despite such policy, Dhar believes “the extent that China’s steel sector needs to reduce output is less onerous than the same time in 2021.”
(With files from Reuters)