The sustained rally in iron ore prices comes after the price of the steel-making ingredient tanked to a trough of $80 a ton in March. The strong gains come after Beijing pumped hundreds of billions of dollars of fiscal stimulus into its economy to help it bounce back from the coronavirus pandemic. Much of this stimulus would go into infrastructure.
In July, China imported a record 112.65 million metric tons of iron ore, a rise of 24% from a year ago and up 10.8% from June, according to customs data. China imported 11.8% more iron ore in the first seven months of this year as compared with the same period in 2019, Reuters calculations show. China also produced a record amount of crude steel in July.
However, iron ore’s price rally may not be sustained, said ANZ. “We see iron ore prices normalising once the seasonal slowdown in construction activity sets in,” the bank’s strategists said in another report on Aug. 12. Fitch Solutions said it expects prices to remain elevated until 2021 before declining modestly.