(HSV VIETNAM GROUP) – Iron ore has benefited from a strong start to 2024, with rising prices and strong Chinese imports, there is growing optimism that the world's largest buyer of steel raw materials has added enough stimulus to boost ore demand.
Iron ore contracts traded in Singapore ended at 135.31 USD/ton on January 26, marking an increase after two weeks of decline. The contract is 1% above the low of $133.99/tonne and prices have been on a broad upward trend since August 2023, when it hit a closing low of $103.21.
The increase mirrored China's main domestic price benchmark, futures on the Dalian Commodity Exchange, which ended at 988 yuan ($137.68) per ton on January 26. This is up 6% from the year-to-date 2024 closing low of 932.5 Yuan/mt on January 18, and the Dalian contract has seen a continuous positive upward trend since the 2023 low of 541.5 Yuan/mt on May 25.
The price increase came as China's central bank on January 24 announced deep cuts in the amount of cash banks are required to keep in reserves, a move aimed at boosting lending to finance real estate and infrastructure development.
Furthermore, China, which buys about 70% of global seaborne iron ore, is on track to import more than 100 million tons in January, according to data compiled by commodity analysts Kpler and LSEG.
Kpler was tracking arrivals of 109.36 million tons, which would be the highest since the all-time high of 112.65 million tons from July 2020.
LSEG forecasts imports of at least 108.47 million tons, which is an increase of about 7.5% compared to imports of 100.86 million tons in December.
Reuters believes that this increase may be due to iron ore inventories tending to increase sharply in the first two months of the year as factories store up and increase output before the peak construction season.
Ha Diem HSV