Chinese demand lifts iron ore price to highest in two months
May 15, 2020 6:41 PM ET|About: BHP Group (BHP)|By: Carl Surran, SA News Editor
Iron ore broke above $90/ton this week for the first time since mid-March, as Chinese government data showed industrial production rebounding in April after collapsing due to the coronavirus outbreak.
China is the world's biggest producer of steel, and demand has been steadily rising since the country began in late March to ease nationwide lockdowns, with daily crude steel production at big plants in China jumping 13% to 2.1M metric tons in the first 10 days of May, the highest level of activity this year.
"With China's crude steel output now at a higher level than a year ago, demand for iron ore is outpacing shipment arrivals. As a result, China's iron ore port inventories are gradually eroding," Morgan Stanley analysts say.
Benchmark ore with 62% iron ore content was priced at $90.75/ton today, according to an assessment by S&P Global Platts, up 2.6% for the week; at that price, top producers BHP, Rio Tinto (NYSE:RIO) and Vale (NYSE:VALE) are generating billions of dollars of cash from their iron ore mines.
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