Strong Chinese Steel Demand Lifts Global Iron Ore Prices during Q2, World Bank

CHINA August 02 2016 6:30 PM

NEW YORK (Scrap Register): Global iron ore prices rose 16 percent during the second quarter of this year, up a second consecutive quarter, on supply reductions (notably Samarco’s closure in Brazil), seasonal restocking, and strong steel demand in China for construction and infrastructure, said World Bank.

Prices spiked to $70 per metric ton (mt) during April but settled back to around $55/mt in early July. Demand is expected to ease in the second half of the year as inventories are replenished and steel production slows seasonally. 

New low-cost capacity is expected to come on line over the next 2-3 years, which may pres- sure high-cost capacity to close. Higher prices this year have delayed closures, but further cuts will be required to balance the market going forward. A key uncertainty will be China’s level of steel demand.