A slightly better than expected performance by China’s steel industry in January and February and more positive data on industrial production for the same period, saw iron ore prices bounce back over the $US100 a tonne level in Singapore on Monday.
62% Fe fines from the Pilbara ended the session up 4% at $104 a tonne – a recovery that took traders by surprise given the rise in port stocks of ore last week.
China’s National Bureau of Statistics (NBS) reported that 167.96 million tonnes were turned out in January and February. The figure benefited from the extra day in February this year because of the leap year.
According to Reuters the industry averaged output of 2.8 million tonnes a day in January and February, so adjusted for the leap year, comparable production to last year was just over 165 million tonnes.
The NBS said crude steel production in 2023 jumped 5.6% to 168.7 million tonnes.
Analysts said the slightly stronger performance was a surprise with many mills cutting output after going to earlier than scheduled maintenance work. As well there was a fall in demand for key steel products such as reinforcing bars (rebar) used in construction and property development and therefore a build up in stocks.
(China releases combined data for January and February to smooth out the impact of the week-long Lunar New Year holiday, which falls at different times in the first two months of the year)
Judging by the 8.1% rise in imports of iron ore in January and February, steel production should have been higher.
Iron ore imports in the first two months of 2024 climbed to 209.4 million tonnes when from the same period of 2022 when 194 million tonnes was imported.
That works out a monthly average of 104.73 million tonnes, versus a monthly average of 98.39 million tonnes in the first two months of 2023.
That compared to 100.86 million tonnes imported in December of last year.
But we now know that portside stocks of ore rose to 139.15 million late last week. That was up 1.1 million tonnes on the previous week and the 12th weekly rise in stocks in a row. It was also more than 9 million tonnes higher than the portside stocks figure a year ago, according to data on the Shanghai Metals Market website.
