Anyone thinking the little rebound in iron ore prices in the past three weeks can continue much longer should think again after China’s November production data showed a shock 20% plus slump in output from the same month in Covid-hit 2020.
Iron ore prices are up from a low six weeks ago of around $US87 a tonne for 61% fe fines delivered from the Pilbara to northern China. 62% fines traded at $US111.90 a tonne on Tuesday so the gain in that time has been an impressive 27%.
That’s despite a surge in iron ore imports in November to 104.96 million tonnes, the highest in 16 months, up 14.6% from October’s 91.61 million tonnes and 6.9% above the level in November, 2020, according to data from China’s General Administration of Customs.
But that has helped push iron ore stocks in China past a reported 157 million tonnes, which means there is a growing overhang of ore at a time when crude steel output is sliding.
Data from the National Bureau of Statistics revealed that China’s crude steel output fell for the sixth consecutive month in November, to 69.31 million tonnes, the lowest for more than two years.
That was down 3.2% from October thanks to production cuts forced by anti pollution measures and weak demand from the continuing slide in the troubled property development sector.
But it was also 21% under the 87.7 million tonnes produced in November, 2020.
More importantly, crude steel production is now 30% under the record single month figure of 99.45 million tonnes turned out in May this year.
That adds to the certainty that the surge in iron ore prices is not sustainable under current stocks and steel output scenarios.
