It is reported the iron ore futures price has reached USD107/ton recently at Dalian Commodity Exchange, increased by 20% than the price of the beginning of April. So what leads to the price rising?
On one hand, optimistic sentiment on China’s high demand for iron ore after the pandemic is one impetus. The iron ore demand from China accounts for more than half of global demand and the shipping of iron ore is more than 70% of shipping globally. Besides, China will invest greatly in infrastructure construction to renovate the economy destroyed by pandemics has been an expectation for many, which has also supported the high demand for iron ore and its price rising.
On the other hand, the concern about on shortage supply of iron ore from Brazil is the main reason for such price increase. Last year, Brazil exported about 6.5 million tons of ire ore per week while decreasing a lot this year. There is only one week this year that Brazil exported more than 6 million tons and during the last three weeks, it exported less than 4.5 million tons. The pandemic situation is still worsening, by the mill's shutdown and output decrease. The mill's shutdown and the supply shortage is probably the main cause of such price surge since people cannot finish mining work by staying at home and long-distance control.