Iron ore prices climbed back on Monday as China’s steel output hit a record high despite the government’s pledge to curb annual production to reduce pollution and increase costs from raw materials.
Crude steel output in April rose to 97.9 million tonnes to hit monthly and daily run-rate records.
The robust pace of production also lifted the year-to-date tally to 375 million tonnes, a 16% jump compared to same period last year. This comes as iron ore stockpiles at Chinese ports declined for the third week, indicating strength in demand.
Benchmark 62% Fe fines imported into Northern China (CFR Qingdao) were changing hands for $217.77 a tonne on Monday, up 4.3%, according to Fastmarkets MB.
Fastmarkets’ 62% Fe iron ore fines index experienced its most volatile week on record last week. After a new high-water mark of $237.57 per tonne on Wednesday, the index plummeted on Friday with a record daily loss of -$28.78.
“We don’t believe runaway iron ore prices are down to a macro reinflation trade on futures markets. While iron ore’s highly liquid paper contracts can certainly impact sentiment, the hallmarks of genuine physical tightness are evident in the details,” said Peter Hannah, Index Manager at the commodity price reporting agency.
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