Iron Ore Price to Record High Demand From China
The price of iron ore has reached a record high on the commodity market. There is a lot of demand for iron and steel, especially in the Chinese economy gaining momentum.
At the same time, the mining sector is struggling to supply all the ore, further driving up prices.
The so-called spot price for iron ore was above $ 200 per ton for the first time in history during the day on Thursday. After the Chinese government indefinitely suspended the strategic economic dialogue with Australia, a major mining country. That means another deterioration in the already tense relationship between the countries.
While primarily a symbolic move by Beijing, ties have already deteriorated in recent years, and China has already introduced hefty import tariffs on certain Australian products, including wine. Up to now, no additional tariffs have been submitted for iron ore. But there are probably fears in the market that this may happen at some point.
The Chinese steel mills are also running at full speed, even though China has implemented production restrictions in the steel industry. These are intended to reduce CO2 emissions and limit the supply of steel on the market. The measures do not seem to work, an analyst from RBC Capital Markets indicates.