The international price of iron ore has risen by regarding 60% in just two months, and has been wriggling recently. This is because of China’s abandonment of the Corona 19 blockade and expectations of re-opening (resuming economic activity) following the biggest holiday, the Spring Festival (Chinese New Year). The sharp rise in international iron ore prices has prompted the Chinese government to warn once morest price fixing three times this year. Iron ore is a raw material for steel products that directly affects industries such as automobiles, consumer goods, and construction.
According to the raw material price information of the Ministry of Trade, Industry and Energy on the 24th, the spot standard iron ore (FE 62%) price in North China (CFR) recorded $126.7 per ton on the 20th. Compared to last year’s October 31, when it was $79.5, it jumped a whopping 59.4% ($47.2) in regarding two months. Compared to the closing price at the end of last year ($117.4), it is marching so high that it has risen 7.9% ($9.3) in 20 days.
On the 13th, the international iron ore futures price recorded $132.3, the highest in 17 months. In response, China’s National Development and Reform Commission (NDRC) issued a warning not to engage in iron ore price fixing and speculation three times on the 6th, 15th and 18th. It is known that China is a ‘big hand’ enough to import 70% of the world’s iron ore maritime transportation, and influences the international market price. According to Archyde.com on the 23rd (local time), market information company Kpler estimates China’s iron ore imports in January, the off-season, at 115.6 million tons. This broke the record for maritime imports in July 2020 (112.654 million tons), the highest monthly record.
According to raw material price information, in the case of raw coal (HARD), which melts iron ore, it recorded $325 per ton on the spot basis of the East Australian Port (FOB) on the 20th, the highest since $338 on June 24 last year. Compared to the record of $188 on August 2nd, it rose by 72.9% ($137) in regarding six months. It rose 10.4% ($30.5) from last year’s closing price ($294.5).
Domestic steel prices are also on the wait-and-see attitude as iron ore prices are on the rise, reflecting China’s reopening expectations. The domestic distribution price of hot-rolled steel sheets remained at 1.05 million won per ton for a month until the 13th. It rose to the 1.25 million won range at the end of last September, and has since continued to fall. At the beginning of last month, it was pushed to the 1.05 million won level, but the decline stopped following that. Heavy plate prices continued to decline from September last year, but have remained flat at around KRW1.15 million per ton since end-November.
In this regard, Park Seong-bong, a researcher at Hana Securities, said, “Steel prices are expected to rise due to rising raw material prices and expectations for economic recovery in China, even during the off-season.”
▲ Trends in the price of steam coal for steelmaking. Data Ministry of Trade, Industry and Energy Raw Material Price Information
Senior Reporter Lee Ki-cheol
