The price of iron ore is rising

Iron ore prices rose as investors awaited the Chinese government's move to lift the economy, which is suffering from a recent spike in Covid-19 cases.

The 62% iron benchmark fine imported to northern China changed hands at $152.25 a ton during morning trading, up 1.06% from Wednesday's close, according to Fastmarkets MB.

On Wednesday, the cabinet said China would use timely cuts in reserve requirements and other policy instruments to support the economy, as well as industries and small businesses hit by the pandemic.

China's commercial capital Shanghai has quarantined its 25 million residents for almost three weeks as authorities struggle to contain the country's largest Covid-19 outbreak since the coronavirus was first identified in the city of Wuhan in late 2019.

Restrictions in Shanghai and other Chinese cities are starting to spread through global supply chains, with some factories being forced to close and delays at ports increasing.

Li Wentao, an analyst at Tianfeng Futures, stressed that some Chinese cities have recently relaxed their property sales policies.

“…Real estate sales are improving and the market is mostly focused on how long it will take to transfer (that momentum) to the real estate development sector.”

Li also expects steel demand to recover in the second half of the year, noting that prices for steelmaking raw materials such as iron ore, coke and steel scrap remain high and weigh down mills' profits.

Demand for steel
Global steel demand is likely to rise 0.4% to 1.84 billion tons this year, down from a 2.7% rise in 2021 due to uncertain prospects stemming from the conflict in Ukraine and growth, the World Association of Steel Manufacturers (WorldSteel) on Thursday.

“The expectation of a prolonged and stable recovery from the pandemic has been shaken by the war in Ukraine and rising inflation,” WorldSteel said in a statement.

“The impact will also be felt around the world through higher energy and commodity prices, especially raw materials for steel production, and the ongoing supply chain disruptions that plagued the global steel industry even before the war.”

The association said that demand in China, which accounts for about half of global steel consumption, will not change this year.

“There are additional downside risks due to the ongoing surge in viral infections in some parts of the world, especially China, and rising interest rates,” the report said.