The daily index for iron ore 65% Fe Brazil rose 4.2%, to $198 a tonne, an all-time high.
In China, activity rates didn’t slow as much as is normal for the Lunar New Year because not as many workers returned home. Many remained in the cities where they work because of covid-19 related travel restrictions.
“Our view is that the market will remain robust for some time”
Fortescue Metals Group Chief Executive Elizabeth Gaines
Ongoing supply issues were also likely to keep prices underpinned given covid-19-related disruptions at Vale’s operations, and the potential for further weather-related port stoppages amid the northern Australian cyclone season.
“Sentiment has also been supported by positive outlooks from the major exporters,” ANZ senior commodity strategist Daniel Hynes told Reuters.
On Tuesday, BHP Group said it expected a continuation of strong Chinese demand in 2021, and a recovery in global crude steel production.
Dalian iron ore has risen nearly 14% this year, with tight supply adding support as Vale struggles to boost output due to operational constraints.
“We would not be surprised if iron ore briefly trades above its historic high of $190/t achieved in February 2011, but we do not see it as likely that prices would stay there for a sustained period of time,” Citi analysts said in a note on February 5.
“Not only in China, but the ex-China activity is also picking up to pre-covid levels,” Fortescue Metals Group Chief Executive Elizabeth Gaines said during a media conference call.
“Our view is that the market will remain robust for some time,” Gaines said.
