Iron ore prices rose Monday in the wake of the release of official figures showing China produced a record amount of steel in 2020, after importing a record amount of iron ore as well.
According to Fastmarkets MB, the price of benchmark 62% Fe fines imported into northern China ended at $US174.07 a tonne on Monday, a new near-decade high.
That was a small rise of 38 US cents a tonne.
The high-grade Brazilian 65% Fe fines also hit a new near record high of $US195.30 a tonne.That was also a small rise of 40 US cents a tonne.
The price of 62% fines delivered to northern China hit an all-time high of $US191.70 in February 2011.
So far in 2021, iron ore prices are ip 8.5% after an 80% surge in 2020.
A sell off soon wouldn’t surprise as the price rises last Friday and Monday were tiny – less than $US1 a tonne in the case of 62% Fines, indicating perhaps that the market is being pressured with prices at these highs.
Chinese steel mills would normally being loading up with extra iron ore at the moment with the week long Lunar New Year break (which starts on New Year’s Eve on February 11) just under a month away.
The timing of the long break is always a stimulant for steel mills to stockpile supplies of ore, coal and other raw materials (That always leads to lower demand for a couple of weeks after holidays).
Last year’s holidays were curtailed by the pandemic. This year there’s a new outbreak of COVID which could force authorities to again put the clamps on travel and celebrations.
Analysts are starting to think that Chinese steel production is at its peak with little room for another surge like 2020’s in 2021.
The government has called for a cut in output this year and says some production capacity will be shut this year. If that happens it will come after China produced a record amount of crude steel in 2020, matching the record amount of iron ore imported to help make that metal.
China’s National Bureau of Statistics said on Monday that the country’s crude steel output topped 1 billion tonnes for the first time – a rise of 5.2% from 2019’s 996.83 million tonnes.
Crude steel output was boosted to the final 2020 figure of 1.05 billion tonnes, helped by a rise in December output to 91.25 million tonnes from.
Last week China’s Customs Administration release trade data including figures confirming that the country’s iron ore imports hit a record high of 1.17 billion tonnes in 2020, with a solid performance in December.
The 9.5% rise over the year was more than expected at the start of 2020 and in June when it looked like the impact of the pandemic would see inbound shipments ease as steel demand cooled.
China’s imports of 1.17 billion tonnes of iron ore beat 2019’s 1.069 billion tonnes and the previous record of 1.075 billion tonnes in 2017.
December saw imports of 96.8 million tonnes of iron ore.
