Another day, however, it’s the same story for the price of iron ore. Prices continued to march higher yesterday as Chinese imports topped over one billion tonnes, with port stocks falling and the country’s steelmakers – responsible for more than 50% the world’s output – ramping up production. The price of the benchmark, 62% Fe fines, closed at just shy of $129 yesterday. This is the highest level for the steelmaking raw material since way back in March 2013 and brings gains for 2020 to nearly 70% from February lows.
Data released over the weekend did show a month-on-month decline for iron ore imports into China last month, however this was still over 8% higher compared to the same month last year. Year to date, China imported over 1 billion tonnes, already surpassing last year’s shipments total and on course for a new annual record, set in 2017 at 1.075 billion tonnes.
China has seen a strong recovery since the country emerged from lockdown earlier this year. Driven by government-led stimulus post lockdown, steel product inventories were drawn down quickly once production was ramped up, not only pushing prices higher, but also boosting margins. As a result, blast furnaces have been operating at record levels for much of the year.
Globally, steel demand has fallen approximately 2.5% this year, and according to the World Steel Association, next year will see a recovery of about the same percentage leaving 2021 consumption roughly around 2019 levels.