Fresh high for iron ore price as Chinese steel breaks records

Benchmark iron ore prices climbed on Friday after economic data showed the country’s steelmakers produced just shy of 1 billion tonnes in 2019, the second record-breaking year in a row.

The Chinese import price of 62% Fe content ore advanced to $97.58 per dry metric tonne, according to Fastmarkets MB, a 6-month high and up 6% since the start of the year.

China produces more crude steel than the rest of the world combined, reaching 996.3 million tonnes in 2019, up 8.3% over the prior year, according to government figures. During December, steelmakers churned out on average 2.7m tonnes per day, 12% higher than December 2018.

Production of steel products in China grew by nearly 10% from a year earlier to 1.2 billion tonnes in 2019. The China Iron and Steel Association said last week it expects domestic demand for steel to grow modestly in 2020 to roughly 890m tonnes.

Vale tailings suspension

Iron ore was also lifted by news Vale halted tailings operations at the 1.2m tonnes per year Esperança mine for safety reasons.

The price of iron ore is up 30% following a dam burst at Vale’s Brumadinho operations in Brazil in January 2019 that killed nearly 300 people. In response, the world no 1 producer initially suspended 93m tonnes of output.

Iron ore peaked in July last year just shy of $126 a tonne, the highest since January 2014, but declined over the summer months as fears of a shortage on the seaborne market receded.

However, the Rio de Janeiro-based company managed to bring much of that capacity back online and ended the year with only around a 5% drop in output to an estimated 310m tonnes. Rio Tinto, set to overtake Vale as the world’s top iron ore miner, reported a 3% drop in annual output yesterday.

Imports top 1 billion tonnes

Chinese imports of the steelmaking raw material topped 1 billion tonnes for the third year in a row as Beijing’s efforts to stimulate the economy pays off.

China’s iron ore purchases in December totalled 101.3m tonnes, up nearly 12% from July and 17% from last year customs data showed, marking the highest level of imports since September 2018.

Full year iron ore imports were the second best on record at 1.069 billion tonnes, up 0.5% from last year and within shouting distance of 2017’s record 1.075 billion tonnes.

source: Mining.com