Iron ore prices in Asia pushed higher on Monday as strong global steel demand buoyed sentiment, and as Chinese steel mills continued to ramp up output despite the government’s scrutiny of their compliance with stricter anti-pollution rules.
“Booming steel production continues to support the iron ore market,” analysts at ANZ told Reuters.
The metal price hit a 10-year high last week, with Benchmark 62% Fe fines imported into Northern China (CFR Qingdao) changing hands for $178.43 a tonne on Friday.
The most-traded September iron ore on China’s Dalian Commodity Exchange ended the daytime trading session on Monday 0.8% higher at 1,060 yuan ($162.70) a tonne, rising for a third consecutive session.
Iron ore futures in Singapore climbed as much as 1.7% to $175.20 a ton before trading at $174.60 by 3:12 p.m. local time.
“Increased scrutiny on emissions is forcing steel mills to use higher-grade iron ore, which is well compensated by strong steel margins,” ANZ analysts said.
Global steel demand will rise by 5.8% this year as economies recover from the COVID-19 pandemic, the World Steel Association said last week, though it painted a cautious outlook for 2022 as the impact of stimulus spending diminishes.
On the supply side Vale, Rio Tinto and BHP are due to report production data this week as well as give market outlooks.
While Vale’s output is expected to come in below the fourth quarter on seasonal factors, it’s estimated to be higher than the same period last year as the company continues its recovery from an early-2019 tailings dam disaster that prompted shutdowns.
This year, Vale is expected to account for 83% of global supply growth, according to BloombergNEF.
(With files from Reuters and Bloomberg)
