Iron ore prices have reached their highest level for 10 years as the seaborne market’s main customer, China, cranks up its steel output in line with its strong economic performance.
Cargoes of 62 per cent Fe grade iron ore for delivery to China are trading at $US182 per tonne ($233.55/tonne) this week, according to Metal Bulletin.
The spot price for seaborne cargoes of iron ore has risen 355 per cent from its 2016 low point of $US40 per tonne and is trading at its highest since September 2011.
“Iron ore prices rose to their highest level since September 2011 on steel demand hopes in China,” said analysts at Commonwealth Bank of Australia (CBA) in a report.
“Booming steel production continues to support the iron ore market. China’s steel output rose by 19.1 per cent in March to 94.02 million tonnes,” ANZ Bank analysts said.
“This has helped push China’s iron ore imports back above 100 million tonnes for the first time since October,” they added.
Emissions controls on steel mills in China’s Tangshan region continue to exert upward price pressure on iron ore prices, especially for higher grade iron ore.
“Strong steel prices on the back of pollution-related curbs on steel capacity have also supported iron ore,” said the ANZ Bank analysts.
The price of Brazilian iron ore fines product with an iron content of 65 per cent was trading at $US216 per tonne, up around $US5 per tonne from a week ago.
Rio Tinto’s (ASX:RIO) shipments of iron ore fines product jumped 7 per cent to 77.8 million tonnes in the March quarter compared with the March 2020 quarter, it said in a report.
Production for the period was 2 per cent lower at 76.4 million tonnes due to wet weather conditions in Rio Tinto’s iron ore mines, said the company.
“Tropical cyclone Seroja impacted mine and port operations in April. Full year iron ore guidance remains unchanged,” said Rio Tinto.
Source : https://stockhead.com.au/resources