Iron ore prices rebound as China's steel output hits new high

(Daiphuc corp) - Iron ore prices rebounded on Monday as China's steel output hit a record high despite the government's pledge to cap annual production to reduce pollution and raise costs from the raw material.

Crude steel output in April rose to 97.9 million tons, hitting a record for monthly and daily running rates.
The strong production rate also brings the number to date to 375 million tons, up 16% year-on-year. This comes as iron ore stockpiles at China's ports fell for a third week, indicating strong demand.
According to Fastmarkets MB, the 62% Fe ore imported into North China (CFR Qingdao) rose to $217.77/mt on Monday, up 4.3%.
Fastmarkets' 62% Fe iron ore index experienced its most volatile week on record last week. After hitting a new high of $237.57/ton on Wednesday, the index fell sharply on Friday with a record daily loss of $28.78.
“We do not believe that iron ore prices are falling due to macro-inflation in the futures market. While iron ore's highly liquid paper contracts can certainly weigh on sentiment, the signs of real tightness are evident in the details,” said Peter Hannah, Director of Only number at the commodity price reporting agency said.
“First, the widening quality differential shows that consumers are willing to pay to improve productivity. The 65% vs 62% Fe spread has also hit a record in recent weeks and is a key factor in the profit engine of steel mills.”
The higher prices for low-contamination grades bought and sold at Chinese ports compared to their seaborne trade (more than $50/ton for Blend Vale, Brazil) have reflected consumer demand. instant consumption of the highest quality, says Hannah.
“As China's steel production continues to expand, the country's steel margins continue to grow, and iron ore supplies from the sea remain constrained, we think iron ore prices can remain at current levels” analysts at Morgan Stanley wrote in a note.Iron ore prices rebound as China's steel output hits new high


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