Iron ore market sees strong start to 2024

Iron ore contracts traded in Singapore ended at US$135.31 per tonne on 26 January, marking an increase after a two week period of decline. The contract was 1% higher than the lows of US$133.99 per tonne, and prices have been in a broad uptrend since August 2023, when they hit a closing low of US$103.21.

The gains have mirrored China's main domestic price benchmark, the futures contract on the Dalian Commodity Exchange, which ended at ¥988 (US$137.68) per tonne on 26 January. This was up 6% from the closing low so far in 2024 of ¥932.5 per tonne on 18 January, and the Dalian contract has seen a consistently positive uptrend since the 2023 low of ¥541.5 on 25 May.

The increase in prices came as China's central bank on January 24 announced a deep cut in the amount of cash banks are required to hold in reserves, a move aimed at boosting lending to fund property and infrastructure development.

Furthermore China, which buys about 70% of global seaborne iron ore, is on track to import more than 100 million tonnes in January, according to data compiled by commodity analysts Kpler and LSEG.

Kpler has tracked arrivals of 109.36 million tonnes, which would be the most since the all-time high of 112.65 million from July 2020.

LSEG forecast the arrival of at least 108.47 million tonnes which could mean an increase of about 7.5% from December's imports of 100.86 million.

Reuters has suggested that this increase can be owed to the fact that iron ore inventories have tended to build strongly in the first two months of the year as mills stock up and boost output ahead of the peak construction season.

For the original Reuters article follow the link here.

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