The iron ore price rose on Tuesday despite traders fretting about high prices squeezing steel mill margins after Chinese demand for the steelmaking ingredient spurred an earlier rally.
Benchmark 62% Fe fines imported into Northern China rose 1.2% Tuesday morning, to $146.30 per tonne.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange ended daytime trading 0.6% lower at 928.50 yuan ($139.32) a tonne, after hitting a 10-week high on Monday.
Top steel producer China’s moves to ease covid-19 restrictions added fuel to the rally, as did shrinking stockpiles of imported iron ore at Chinese ports.
“The short-term iron ore demand has increased more than expected, but the profits of downstream steel mills are weak,” Sinosteel Futures analysts said in a note.
“Seaborne iron ore prices were fairly stable amid unchanged futures and swap prices due to stable demand from steelmakers,” wrote Fastmarkets.
China’s crude steel production fell in 2021 for the first time in six years after record output in 2020 as the country stepped up efforts to contain emissions in its mammoth ferrous sector. It is aiming for even lower output this year.
(With files from Reuters)