Iron ore prices jumped more than 10 per cent in Asia trading on Monday on growing expectations that the global economic recovery from the Covid-19 pandemic would extend beyond China and buoy commodities markets.
Futures prices for iron ore in Singapore rose to more than $226 per tonne, a record in dollar terms. The most-liquid September iron ore on China’s Dalian Commodity Exchange DCIOcv1 leapt 5.3% to 1,214 yuan ($187.94) a tonne by 0330 GMT, after earlier touching a high of 1,217.50 yuan.
Spot prices for imported iron ore in China's sea and port cargo markets soared on Thursday amid suppressed demand following the five-day national Labor Day holiday.
Mysteel's 62% Australian SEADEX fines increased $ 10.95 per dry metric ton from Wednesday to $ 201.15 / dm CFR Qingdao, the highest level since the consultancy's index assessment began in January 2010.
Dalian's iron ore is up 9.5% this week despite the holidays, on track to mark its best week since mid-December. The demand has become stronger, especially for high-quality and less polluting materials.
“It is more than just China now. . . it's the full force of the recovery in the global steel industry,” said Justin Smirk, senior economist at Westpac. "I think the reality is that the market is still incredibly tight, we still have very, very strong steel prices."
The robust recovery in China's economy, which returned to pre-pandemic growth rates late last year, lost some momentum in the first quarter. Iron ore imports in April fell compared to March.
Commodities in China have increased producer prices this year and data released on Tuesday is expected to show a jump of more than 6 percent. China recorded a negative PPI in the time between the start of the pandemic last year and the beginning of 2021.
"Recent production cuts at Tangshan have boosted demand for higher-quality ore and prompted mills to build iron ore inventories as they increase their margins with restricted steel supplies," said the chief steel analyst at CRU Group, Erik Hedborg in London.
Hedborg was referring to China's main steel city, where stricter anti-pollution regulations have been implemented. To improve air quality, China will tighten steelmaking capacity swap controls in key areas suffering from air pollution.
Supply concerns also boosted iron ore prices amid signs of deterioration in relations between the top steel producer, China, and the largest iron ore supplier, Australia.
Steel prices on the Shanghai Futures Exchange increased their gains to new all-time highs, with SRBcv1 construction steel rebar rising 1.3%, while SHHCcv1 hot rolled coil rose 2%. Advanced stainless steel SHSScv1 0.3%.
Dalian DJMcv 1 coking coal gained 1.5%, while DCJcv1 coke was up 2.7%.