Asurge in steel consumption as the world emerges from its pandemic-induced slump is set to drive iron-ore to an unprecedented high as the biggest miners struggle to keep up with the frenzied pace of demand.
Expectations are building that benchmark prices can get to $200/t -- topping the record $194 hit more than a decade ago -- as Chinese steelmakers ramp up production in defiance of government attempts to rein in output to control the industry’s carbon emissions. That’s tightening an iron-ore market that hadn’t fully recovered from a supply shock more than two years ago.
“iron-ore prices could go higher in the short-term and exceeding $200/t is definitely possible,” said Kim Christie, a senior analyst at consultancy Wood Mackenzie. It would only take extra supply concerns, or additional strength in Chinese steel production, for prices to get there, she said.
At the heart of spot iron-ore’s 14% climb last month, helping drive the supercharged commodities rally, has been rising steel prices from Asia to North America. Particular focus has been on China, where the economy has boomed and a swath of measures aimed at cleaning up the world’s biggest steel industry pushed mill profitability to the highest in more than a decade.
