Iron ore continues to rise in price as global economy recovers from the pandemic and its consequences, which is reflected by the ever growing demand in China.
On May 10, ore prices in Asian markets jumped by 10%, causing an increase in shares of producers. According to experts, the iron ore market is overheated, while price may reach US$130-150 per ton.
According to data of Financial Times (FT), iron ore futures in Singapore rose to US$226 per ton - a record in dollar terms. On the Dalian Commodity Exchange, futures rose 10%, while spot prices for iron ore by 62% in to $212 per ton.
The rise in prices has led to a rise in shares of large iron ore producers. For example, shares of Rio Tinto reached a record high - US$67.05.
According to analysts, one of the factors that led to the jump in prices became new initiatives of the Chinese government to reduce steel capacity in the domestic market.
On May 6, the Chinese State Committee for Development and Reform and the Ministry of Industry and Information Technologies instructed the country's metallurgists to start reducing their capacities from June. By a separate circular, the government instructed to audit all metallurgical enterprises of the country and to transfer more than 20 million tons of capacity from the coast of the country.
Still, despite this steel production in China continues to grow. In March, excess capacities grew by an additional 19%.
Due to this in April, imports of raw materials to China grew by 43% in annual terms, although these figures may be related to the effect of the low base of the pandemic April 2020.By