Iron ore prices hit 6-year high

Amid growing demand for iron ore in China, the price of the most important steelmaking raw materials is on the rise, with an increase of almost 34% since the beginning of the year. Steel product prices exceeded $ 125 per ton for the first time since February 2014. This is primarily driven by strong demand from China, which is trying to revive its pandemic-stricken economy, while the coronavirus situation in Brazil continues to raise supply concerns. crunch.

Chinese Recovery Boosts Iron Ore Demand

According to the World Steel Association, global crude steel production in July was 152.7 million tons (Mt), down 2.5% from last year, largely due to the COVID-19 pandemic. Meanwhile, China alone produced 93.4 million tonnes of steel - the largest monthly volume on record and about 61% of total production. In addition, China's steel production in July increased by 9% over the same period last year. Between January and July 2020, global steel production fell 5.3% year-on-year to 1,027 million tonnes, while steel production in China rose 2.8% to 593 million tonnes.

China's iron ore imports in July rose 24% year-on-year to a record 112.65 million tonnes. In the first seven months of 2020, China imported 659.6 million tonnes of iron ore, up 11.8% over the same period last year.

In addition, China's official manufacturing PMI stood at 51.1 in July 2020, up from 50.9 in June, and maintained a streak in manufacturing activity for five straight months. This is a major recovery from a record low PMI of 35.7 in February, which can be attributed to the coronavirus-related lockdown.

These figures show that China is gradually emerging from the crisis. Going forward, the country is likely to see strong demand for steel as it raises investment in infrastructure and production picks up steam. Thus, demand for iron ore is expected to remain strong. The World Steel Association expects steel demand in China to grow 1% in 2020. Benefits from infrastructure projects launched this year will continue and will support steel demand in 2021.

Deliveries from Brazil under threat

While demand in China is showing resilience, the worsening COVID-19 situation in Brazil - the second largest iron ore producer - has raised concerns over limited iron ore supply. With around 3.79 million coronavirus cases and 117,756 deaths, the country is currently �