Iron ore price rose on Thursday, bolstered by hopes for rising demand in China, after reports of easing covid-19 measures at the world's largest steelmaker.
The benchmark value of 62% Fe imported into northern China was changing hands at $153.33 per ton in morning trading, up 5.8% from Wednesday's close, according to Fastmarkets MB.
The top-traded iron ore contract for May on China's Dalian Commodity Exchange ended day trading at 797.50 yuan ($126.27) per tonne, up 6.8 percent after climbing 9.7 percent to its highest level since February 11.
"China's entire anchored futures complex is reacting enthusiastically to reports that the country is considering exiting its 'zero tolerance' stance on covid-19, where the 'stop/start' impact on the economy is a heavy burden," he said. Atilla Widnell is managing director of Navigate Commodities in Singapore.
"Less intermittent quarantine will support China's quest to get the economy back on track."
But the head of a group specializing in covid-19 prevention said it was still too early for China to consider easing strict coronavirus restrictions, and the highly contagious omicron strain could still cause large numbers of deaths.
China plans to increase iron ore equity production in overseas mines to 220 million tons by 2025 and increase domestic raw material supply, state-backed China Metallurgical News reported on Tuesday.
Luo Tiejun, vice-president of the China Iron and Steel Association, stated that China aims to "fundamentally" solve the shortage of materials used in steelmaking for 10-15 years, referring to a quote that he calls a "foundation plan".
The plan, which the steel corporation said it submitted to the state planner, ministry of industry, ministry of natural resources and environmental regulator in January, is designed to secure steel resources in the medium to long term.
According to Luo, he is proposing to increase China's share of overseas iron ore production from 120 million tons in 2020 to 220 million tons by 2025. The basic plan also aims to increase domestic iron ore production by 100 million tons to 370 million tons and steel scrap consumption by 70 million tons to 300 million tons.
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