Iron ore price in full retreat as Chinese steel starts to pile up

Iron ore prices fell back on Tuesday after data showed five straight weeks of lower production by Chinese steel mills, which forge more crude steel than the rest of the world combined.

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China (CFR Qingdao) were changing hands for $165.07 a tonne, down 2.4% for its third day of losses in a row. 

The steelmaking raw material hit its highest level since September 2011 earlier in January.

Reuters reports capacity utilisation rates at 163 blast furnaces across China fell for five straight weeks to 82.2% last week, according to data from Mysteel consultancy.

That lead to a rise in steel product inventories which had been piling up for a month and in the week to January 21, jumped 6% compared to a week earlier.

The dip in iron ore prices also came despite World Steel Association data released on Tuesday showing global crude production rose 5.8% to 160.9 million tonnes in December from a year earlier, with China accounting for 91.3m tonnes of the total after a 7.7% output jump during the month.