Dalian iron ore futures climbed up 7% on Thursday, putting the benchmark contract on an 8-week high price, buoyed by the improved demand from China for the steelmaking raw material after the Lunar New Year holiday and surge in the global economic recovery.
May iron ore on China’s Dalian Commodity Exchange vaulted to 7.1% at 1,131.50 yuan ($175.22) a tonne, after registering a high of 1,134.50 yuan, its highest level since Dec. 22.
Iron ore surge continues
Iron ore’s most-active March contract on the Singapore Exchange edged up by 1.5% to $169.40 a tonne. Meanwhile, Dalian coking coal climbed 4.1% and coke surged 6.1%.
Dalian iron ore had jumped by 14% this year. According to SteelHome consultancy data, spot iron ore in China had traded at $161 a tonne before the holiday.
Iron ore market to remain robust
According to Fortescue Metals Group, the global iron ore market looks likely to remain robust for some time due to China’s stronger-than-usual demand and supply woes.
BHP also concurred with the observation and noted that they are expecting further strong Chinese demand in 2021 and a recovery in global crude steel production.
Higher demand from China
Many construction sites had remained open throughout the week-long Chinese Lunar holiday, and Chinese steel mills are anticipated to increase production to rebuild stocks and to meet future demand.
Brazilian mining giant Vale SA’s operational constraints had resulted in a dip in the output, leading to tighter supply.