The iron ore price rose on Thursday fuelled by hopes of recovering steel production in China after stringent curbs in the first 11 months of the year.
“Since targets for crude steel output have now been met, some mills are resuming production and profitability is relatively good,” Huatai Futures wrote in a note.
A government consultancy on Wednesday predicted that China’s steel demand could dip in 2022 from this year, but added consumption from infrastructure construction, automobile and other sectors will continue to offer support.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $116.06 a tonne during afternoon trading, up 4.5% compared to Wednesday’s closing.
Benchmark iron ore futures on the Dalian Commodity Exchange, for May delivery, ended up 2.8% to 673 yuan ($105.71) per tonne.
“The market appears to be positioning for a rebound in steel demand in the first half of 2022, built on expectations that Beijing will once again open the stimulus taps to boost economic growth,” wrote Reuters columnist Clyde Russell.
“Overall, it would appear that iron ore prices are rebounding on the expectation of future demand, and are happy to ignore the current signs that there is too much of the raw material arriving in China.”
(With files from Reuters)