Seemingly unnoticed by the bears, particularly in Australia, iron ore prices surged on Monday, regaining the $US100 per tonne level on the SGX trading platform in Singapore.
62% Fe fines ended the day at $US100.25 per tonne, a 5.3% increase from Friday’s close of $US96.11.
This return above the $US100 per tonne mark ended an 11-day period below that level, defying dire predictions about “winter” and other challenges facing the Chinese steel industry that commodity analysts have been highlighting for months, if not years.
Chinese mainland prices rose by 3.45% (including tax).
The property crisis has significantly reduced demand for steel products, and weaker demand from other sectors is not helping. The industry has been supported by a surge in exports over the past 18 months, which ended in June and July with a sharp decline in shipments.
The exported tonnages equate to an annual rate of approximately 90 million tonnes, equivalent to a month’s crude steel output and more than sufficient to maintain prices above $US100 to $US120 per tonne.
However, the unexplained declines in June and July slashed demand for iron ore, causing portside stocks to rise above 150 million tonnes earlier this month, where they have remained.
The Mysteel website reported a recent increase in steel prices across China as demand has edged up. This was reflected in Monday’s jump (which covers ore delivered late next month or more likely in October). The Monday price reached $US105 per tonne (around 750 yuan), according to the Shanghai Metals Market daily report.