Iron ore prices have hit a six-year high on tight port stocks of mid-grade ores and optimism about Chinese demand on fresh injection of funds into the economy.
Chinese furnaces, where more than half the world’s steel is forged, are rolling out crude steel at a never before seen pace.
Benchmark 62% Fe fines imported into Northern China were changing hands for $128.57/t on Tuesday, the highest level for the steelmaking raw materials since January 2014 and brings gains for 2020 to nearly 40%.
China produced 93.4mt of crude steel in July, the largest monthly volume on record.
Crude steel output in July was 2pc higher than the month prior, and 9% higher than July 2019, according to data from the National Bureau of Statistics.
Iron ore shipments from the four largest producers in the Pilbara region of WA were below the annual rolling average for a fourth week in a row in the week to August 15, on lower exports by Fortescue Metals Group and Rio Tinto.
A near-50pc surge in iron ore prices over the past three months has lifted the product’s share of Chinese steel costs to an all-time high, with 62pc Fe import prices exceeding coking coal prices for the first time.
Optimism about Chinese economy and in turn iron ore demand also stems from the Chinese central bank’s statement that it will inject 700b yuan ($100.74b) through one-year medium-term lending facility (MLF) loans.
