The seaborne iron ore market hit its highest so far this year Monday as a rise in steel billet price buoyed sentiment the outlook for iron ore.
Platts assessed the 62% Fe Iron Ore Index at a year-to-date high of $81.65/dry mt CFR North China Monday, up $1.30 from Friday.
The front month December IODEX swap rose $1.1/dmt to Friday at $78.05/dmt Monday. The spot price of square billet in Tangshan, an important barometer of steel performance in China surged Yuan 100 from Friday at Yuan 2,730/mt ($395.41/mt) ex-stock Tangshan Monday.
A source at a major state-owned enterprise in Beijing said that there is market news that the government is pushing for new initiatives to reduce steel production or capacity in Hebei and eastern part of China, and concerns on a possible steel production cut is lending strong support to steel billet price.
"A production cut for steel is going to hit demand for iron ore in the long run, but no one really cares about it today," said a Beijing trader who noted that spot buyers were jostling for iron ore cargoes to produce more steel before production cut sets in.
