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Iron ore surges as China’s steel output approaches ‘inflection point’ - AFR

Alex Gluyas

Speculation that China’s steel mills are preparing for an easing of production cuts as soon as next month sent iron ore prices surging as traders positioned for an approaching inflection point in the country’s steel output.

The price of iron ore traded in the spot market jumped 6.8 per cent to $US103.27 a tonne, according to Fastmarkets MB, more than recouping the losses from Friday’s omicron-induced sell-off. Futures in Singapore were up nearly 10 per cent.

Signs of an imminent lift in China’s steel output boosted iron ore prices. AP

The bulk commodity’s swift rebound followed a report by Chinese research group MySteel which indicated that China’s steel mills are restocking ahead of a restart of idled plants in December, which is expected to trigger a rise in pig iron production.

“This could mark the inflection point after months of pressure on output,” said senior commodity strategist at ANZ, Daniel Hynes.

Widespread steel production curbs have sent iron ore prices spiralling from record highs as Chinese authorities cut emissions ahead of next year’s Winter Olympics, and demand for the commodity plummeted amid a slowdown in China’s property sector.