Iron ore price jumps on supply crunch at Chinese mills

MINING.COM Staff Writer | March 25, 2022 | 8:57 am News China Iron Ore

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The iron ore price jumped nearly 4% on Friday as Chinese mills wrestle with supply shortages because of covid-related disruptions.

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $150.75 a tonne during morning trading, up 3.5% compared to Thursday’s closing.

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The most-traded iron ore futures on the Dalian Commodity Exchange, for May delivery, rose as much as 3.9% to 858 yuan ($134.82) a tonne. They ended at 856 yuan per tonne, sending the weekly gains to 2.7%.

Producers in the top steelmaking city of Tangshan are set to cut or suspend output as their raw material stocks can only feed production for several days while transportation remained constrained due to a temporary lockdown.

Traffic controls are disrupting operations at some mills in the northern city, which has long played a pivotal role in the world’s biggest steel industry. Tangshan churned out over 130 million tonnes of steel last year, some 13% of China’s output.

The average daily output of around 36,100 tonnes of molten iron had been affected in Tangshan as of March 24, data compiled by Mysteel consultancy showed, amid blast furnaces maintenance because of a supply crunch.

Almost 80% of the Chinese economy has been affected in some way by the worst outbreak of covid-19 in two years, straining the supply of commodities and posing an increasing threat to demand.