Iron Ore Rallies as China Building Season Nears: Demand Boosts Prices

Metals – Iron ore rallies ahead of China building season

Iron ore witnessed a fifth straight session of gains yesterday with prices reaching intra-day highs of US$113.9/t (highest in almost a month) on better demand prospects from the Chinese steel industry. Rising speculation that steel mills in China will ramp up production ahead of the seasonal pick-up in construction activity (September-October) is supporting the market. Falling iron ore port inventories in China, which are currently hovering at their lowest levels since the end of August 2020, might also encourage domestic mills to start restocking.

Recent data from the China Iron and Steel Association (CISA) shows that steel inventories at major Chinese steel mills rose to 16.6mt in mid-August, up 3.6% compared to early August. Crude steel production at major mills rose 2.9% from early August to 2.22mt/d in mid-August.