FX.co ★ Iron Ore Starts the Year Higher

Iron ore futures have risen above CNY 790 per tonne, marking a robust beginning to the year due to increased demand and constrained supply conditions in China. This uptick is attributed to steelmakers' efforts to replenish stocks in preparation for the upcoming Lunar New Year holiday in February, which has helped mitigate the effects of heightened shipments. Analysts have observed that raw material inventories within China stay relatively low, partially due to certain iron ore mines reducing production to comply with environmental protection policies. Furthermore, industry reports indicated a 1.1% decrease in inventories of five major carbon steel products at Chinese steel mills last week, bringing the total to 3.81 million tonnes. Additionally, a private survey revealed that Chinese business activity continued its expansionary trajectory for the seventh consecutive month in December, buoyed by stronger services activity and a revival in factory output.