At US$ 220 per ton, ore price doubles in one year

Despite the Chinese government’s efforts to contain the advance of commodity prices in recent months, iron ore traded again at close to US$ 220 per ton, reaching the highest level in three weeks on June 11. After a brief correction, the average price of the main raw material for steel in the first half of 2021 reached US$ 180.55 per ton on the spot market – a reference for transoceanic contracts – twice the value registered in the same 2020 period.

Heated demand and restricted supply supported the commodity’s appreciation in recent days. In addition to the short-term factors specific to the ore market, there has been stronger-than-expected economic growth in different regions which ended up being reflected in the widespread appreciation of raw materials.

For analysts and consultants, there are no fundamentals that justify such high prices for ore and the expectation is for some correction from the second half of the year – the rate of decline will depend on steel production levels in China.

“We expect the price to decrease as the market settles, although it is difficult to predict when this will happen,” CRU Group principal analyst Erik Hedborg wrote in a recent report.

Source: Valor Econômico

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