Iron ore price flirts with key $100/T level on firm demand, China stimulus hopes
Analysts say near-term demand for iron ore remain strong, supporting prices.
Iron ore prices continued to climb on Friday despite concerns over environmental restrictions in China.
Tangshan, China’s top steelmaking city, said last month it will punish firms that either have not taken the steps spelled out under its emergency anti-pollution plan or have illegally discharged pollutants, following weeks of heavy smog in northern China.
According to Fastmarkets MB, Benchmark 62% Fe fines imported into Northern China (CFR Qingdao) were changing hands for $178.43 a tonne on Friday – the highest level since 2011.
Goldman Sachs see prices falling back to $110 a tonne by the fourth quarter
The high-grade Brazilian index (65% Fe fines) also advanced to a record high of $211.10 a tonne.
“Steel margins in China are very attractive at the moment, so even with the restrictions in Tangshan, other producers have every incentive to try to increase operating rates,” ING head of commodities strategy Warren Patterson told the Financial Review.
“Stronger margins, along with more focus on reducing emissions, has also proved supportive for higher-grade iron ore demand. This is reflected in the quality premium, which has widened recently,” Patterson said.
“Despite talk of nationwide inspections, we believe other regions will ramp up, particularly given the spike in steel margins,” JPMorgan analyst Lyndon Fagan said.
According to IndexBox, global steel consumption is forecast to increase in 2021 by 4.1% year-on-year.
Prices have also been fueled by falling supplies from major miners.
Goldman Sachs expects the market to enter a surplus in the second half of the year on higher Brazilian exports, bank analysts wrote in a note, adding they see prices falling back to $110 a tonne by the fourth quarter and below $100 in 2022.
(With files from Bloomberg and Reuters)
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Santos Urbina Morales
Buen día estimados miembros de.mining.com primeramente mis saludos cordiales y felicitaciones a todos los integrantes de tan interesante medio de información de la minería y los metales y sus repercusiones en la sociedad. Estoy en un proyecto de una cooperativa minera. Me parece importante un análisis y reportaje de la situación minera de mi país. México; actualmente estamos viendo una información difusa del gobierno sobre está actividad. Y tengo la idea que el cooperativismo es una opción para lograr un desarrollo integral de el sector minero y la sociedad. Creo que será de gran utilidad su trabajo periodístico de investigación para todos los sectores que tienen que ver con esta tan importante actividad económica.