The iron ore price extended a rebound from an 18-month low on bets stronger-than-expected steel output cuts so far this year mean China’s steel mills are primed to lift volumes next month.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $99.83 a tonne, up 4.2% from Monday’s closing.
The most actively traded iron ore futures on the Dalian Commodity Exchange, for January delivery, soared as much as 9.9% in the morning session, the biggest percentage gain since Sepember 30. They ended up 7.8% at 587 yuan ($91.96) per tonne.
“The supply-side of iron ore has not changed much recently, but more mills are planning to increase output next month,” a Beijing-based trader said.
Another Shandong-based iron ore trader said the market is trading on expectations of rising steel production in December.
China had successfully controlled its January-October crude steel production at lower levels than the same period in 2020 after a raft of strict curbs and sluggish downstream demand, leaving room for steel firms to raise output for the rest of the year on a monthly basis.
Apparent demand for five main steel products, including rebar, wire rod and hot-rolled coils, gained for two consecutive weeks and was up 4.2% last week from early-November, data from Mysteel consultancy showed.
(With files from Reuters)