Expectations that China will import a record amount of iron in 2013 as the demand for steel continues to surge has seen prices for the ore rallying at fastest rate for two years.
Prices of iron ore tumbled to a three-year low in the autumn, before rallying 60% since then on mounting confidence that China, the world’s biggest importer of the ore, would be experiencing an accelerated growth in 2013.
Trade to China is expected, according to a report in Bloomberg, to climb 6.9% to 778 million metric tonnes in 2013.
The news marks an important turnaround in attitudes compared to September when mining companies were seen to be cutting back on capital expenditure programmes as expectations held that the commodity super cycle fuelled by China’s growth was slowing down.
Ore at China’s Tianjin port, a global benchmark, was last tracked at $139.40 a tonne, for an gain of 0.6% and a fourth quarter average of $119.88. According to Bloomberg, a median of analysts’ estimates shows that the price will average $119 in the first quarter of 2013 and $122 in the following three months.
China’s miners may struggle to make up for any shortage in seaborne supply because they produce ore that contains about 20% iron, compared with 62% internationally, according to HSBC estimates and data compiled by Bloomberg Industries.