Iron ore price has climbed to its highest level in three months, as stockpiles at China’s major ports declined.
Iron ore inventories at 31 major Chinese ports for the week that ended on 22 May declined to 84.9 million tonnes from 86.6 million tonnes the week earlier, according data provider Mysteel. The volume was as high as 100 million tonnes at the beginning of 2015.
Inventories at ports are expected to drop further, according to local iron ore traders.
A benchmark price for iron ore, published by The Steel Index, increased 0.8% to USD62.60 per tonne on 27 May, reaching its highest level since 2 March, and surged 34% from the lowest price of USD46.7 per tonne on 3 April in the recent six months.
Short-term demand for steel is fine and the demand for iron ore rises as steel stock keeps decreasing and steel mills maintain high operating rate, according to Shengda Futures analyst Zou Wuhai.
“The bottom of iron ore has passed, in my opinion,” Zhuang Junbin, business development director of Fortescue Metals Group, said to local media.
“China’s crude steel output is the key to the iron ore price. If it drops again in the second half of this year, so will the iron price.”
Recent deals between Chinese companies and Vale will help cut down the freight rates to ship iron ore from Brazil to China. However, iron ore from Pilbara in Australia still has the lowest cost at present, Zhuang noted.