Iron ore continues its resurgence to start 2022, with seaborne prices reaching a five-month high late last week.
According to Mysteel, the price for 62 per cent Australian iron ore fines was trading at $US146.1 ($208) per dry metric tonne (dmt) at the port of Qingdao on Friday – a far cry from a price of below $US90 per dmt in November 2021.
This comes as traders and producers stock up on raw materials ahead of the Chinese New Year, a seven-day holiday at the beginning of February.
From January 21–27, Mysteel found inventories of imported iron ore at China’s 45 major ports had decreased to a two-month low of 153.1 million tonnes (mt) in total.
Those same 45 ports received approximately 22 mt of iron ore imports from January 17–23, a 12.1 per cent decline week-on-week.
The total volume of iron ore discharged from the 45 ports between January 21–27 was approximately 22.4 mt, a slight 1.1 per cent decrease from the week before.
As of January 27, the stocks of Australian iron ore at China’s 45 ports reached a three-month low of 70.5 mt, with inventories reducing by 1.7 mt week-on-week.
While market sentiment is improving as China looks to ramp up infrastructure and industrial developments, there is still uncertainty surrounding iron ore’s future.
According to Saxo Australian market strategist Jessica Amir, China’s real estate sector is one to keep an eye on.
“China’s property sector is looking shaky and keeping gains in check. China’s biggest developers are in financial distress. Evergrande has recommenced work on over 60 major projects, but we still don’t know the fate of China’s property sector,” she said.
It appears Evergrande’s situation hasn’t improved to start 2022, with reports the company has been off-loading stock to meet interest payments. Falls in residential property prices are also discouraging new construction in China’s property sector.
While China imports about 70 per cent of its iron ore needs, the country is commissioning new domestic mines to reduce its external reliance, which could also have a material impact on the price of the commodity and affect Australian producers.