“There is fear of not being able to secure the logistics and the resources you need — $220 is expensive, but it’s much more expensive if you have to shut down a mill because you can’t get material.”
Benchmark 62% Fe fines imported into Northern China (CFR Qingdao) hit a new record on Wednesday, up 3.7%, changing hands for $237.57 a tonne, according to Fastmarkets MB.
Chinese steelmakers are ramping up production in defiance of government attempts to rein in output to control the industry’s carbon emissions.
The stainless steel futures for June delivery jumped 2.2% on the Shanghai bourse to hit an all-time peak of 15,580 yuan a tonne.
China will monitor changes in overseas and domestic markets and effectively cope with a fast increase in commodity prices
“Although it’s still a bull market, the rapid price surge in short-term has accumulated risks and there’s possibility for adjustment,” analysts with SinoSteel Futures wrote in a note.
“The forward contract gained significantly stimulated by intensified China and Australia relations,” according to SinoSteel, adding that the possibility of limiting iron ore imports from Australia is very small, but sentiment could impact in the short run.
Analysts with Huatai Futures also reminded investors to control positions on increasing risks due to high iron ore prices.
China’s southern area is about to enter a rainy season that could potentially dampen demand for construction materials.
The country’s top steel auto sheet producer Baoshan Iron & Steel said in a call on Tuesday that automobile demand in the second quarter is hurt by chip shortage, while the third quarter is traditional off-season.
China will monitor changes in overseas and domestic markets and effectively cope with a fast increase in commodity prices, the state council said on Wednesday.
The country will step up coordination between monetary policy and other policies to maintain stable economic operations, the cabinet also said, as reported by state television.
(With files from Bloomberg and Reuters)
