Iron ore prices jumped on Monday on rising demand amid strong construction and manufacturing activity in China.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China (CFR Qingdao) were changing hands for $167.88 a tonne, up 4% from the previous trade.
Iron ore price reached its highest level since September 2011 in mid-January, at $174.07 per tonne. The benchmark hit an all-time high of $191.70 in February 2011.
China’s industrial profit surged 179% in the first two months from the year-ago period, data from the National Bureau of Statistics showed on Saturday.
Margins in the manufacturing sector jumped 219.5% on an annual basis, while profit earned by ferrous smelting and processing companies soared 271% during the January-February period, according to the statistics bureau.
Apparent demand for five main steel products, including steel rebar and hot-rolled coil, rose 5.6% week-on-week, data from Mysteel consultancy showed.
“According to the usual practice, if daily turnover for construction materials stays above 200,000 tonnes for a week, it can be proved that peak demand season has come,” Tang Chuanlin, analyst with CITIC Securities told Reuters.
Last week, Tangshan, China’s top steelmaking city, said it will punish firms that either have not taken the steps spelled out under its emergency anti-pollution plan or have illegally discharged pollutants.
But despite prices dropping after the announcement, experts believe market conditions will remain supportive for producers.
“This is the start of the boom, not the end,” said Tribeca Global Natural Resources portfolio manager Ben Cleary.
Top producer Australia expects to log a record A$136 billion ($103.85 billion) from iron ore exports this financial year, a government report showed on Monday.
(With files from Reuters)