The China steel and iron ore market narrative for 2021 was supposed to be pollution-led curbs on steel output, coupled with rising iron ore supply, leading to lower prices.
Neither is happening.
The world's three biggest iron ore miners all reported lower production in the first quarter of this year compared with the last quarter of 2020.
China’s steel output rose to 94.02 million tonnes in March, the highest since August 2020 and at 3.03 million tonnes per day, it was above the daily average of 2.97 million tonnes in the first two months of the year.
It's therefore unsurprising that spot iron ore prices for delivery to north China , as assessed by commodity price reporting agency Argus, reached a decade-high of $188.70 a tonne on April 22, before easing slightly to end at $185.60 on Wednesday.
The high price of iron ore, as well as strength in China's domestic steel prices and profit margins for mills, has prompted some official concern. Beijing's industry ministry went so far as to say on April 20 that it would take steps to stabilise raw material prices.
The ministry will work together with relevant departments to fend off panic buying or hoarding, and “resolutely” crack down on market monopolies and malicious speculation, Ministry of Industry and Information Technology spokesman Huang Libin said, without elaborating.
