Iron ore prices rose for a second consecutive day backed by strengthened demand, heightened output data from China and lower inventory levels.
The most-traded iron ore contract on the Dalian Commodity Exchange, for September delivery, was up 5.5 per cent to 1,256 yuan ($195.26) per tonne before closing up 4.3 per cent at 1,243 yuan on Tuesday.
Analysts at Huatai Futures,China, noted that steel consumption is still at seasonal peak in the short term as mills are actively producing, driven by high profits, which is supporting raw materials.
Further reports indicated that China’s steel output hit a record high despite the government’s effort to lower annual steel production in its fight against enviromental pollution.
Data gathered by Mysteel Consultancy, an online steel pricing and intelligence service, projects single-digit growth for apparent steel consumption in China to persist past 2021 as a result of the nation’s medium-term urbanization targets.
Analysts at multinational investment firm, Morgan Stanley, project that as long as China’s steel production continues to expand,iron ore price could stay around the current level through 2Q, but likely to remain highly volatile.
On the other hand, Brazilian iron ore producers are looking to generate cash and make new investments to supply a tight market, Ibram, a leading South American mining industry group noted.