Iron ore price rises as China markets reopen after holiday www.mining.com
The iron ore price rose on Friday after a week-long holiday in China, with market participants upbeat about demand prospects for the raw material in the world’s top steel producer.
China’s electricity shortage has raised concerns energy-intensive electric arc furnaces that utilize iron scraps to produce steel could be hit, which means more steel output required from blast furnaces using iron ore.
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The most-traded January iron ore on China’s Dalian Commodity Exchange was 4.9% higher at 762.50 yuan ($118.24) a tonne Friday morning, just below a session-high 769 yuan, its strongest since September 6.
“With property developers struggling due to high debt levels, the spectre of strong demand for steel and iron ore remains low,” said ANZ senior commodity strategist Daniel Hynes.
But China’s steel output cuts spurred by the country’s decarbonisation policy remain the bigger worry.
“We see China’s steel output remaining under pressure until the end of Q1 2022, as authorities are keen to show a ‘green’ Winter Olympics in February,” Commonwealth Bank of Australia analyst Vivek Dhar said.
Sentiment among Chinese investors “has recently recovered to a neutral level, but the trend is decidedly downward and the upside is capped by recent domestic default stories,” said Olivier d’Assier, head of APAC applied research at Qontigo.
“The main issues affecting sentiment have been purely domestic so far, but on the geopolitical front, the US-China trade talks have yet to take place and this issue remains unresolved.”
Relations with the US are under the microscope after news that President Joe Biden plans to meet Xi Jinping virtually by year-end.
(With files from Bloomberg and Reuters)
Published Date:2021-10-10