Australia's iron ore (62% Fe, CFR China) on July 21 reversed to increase by US$2.8 to US$102.55, which reached a nearly two-month high since May 22. Following yesterday's continued increase, iron ore has risen by a total of US$5.55 in July, with the gain expanding to 5.9%.

After a strong surge yesterday, iron ore prices once again broke through the US$100 level, reaching a new high since May 15. Also, the prices have increased by US$9 so far in July, representing a 9.6% gain. Year-to-date, prices have reversed course to a cumulative increase of US$1.95, or 1.93%.

On July 19, China announced the launch of the Yarlung Tsangpo River dam construction project with an investment of at least CNY1.2 trillion, providing strong macroeconomic support. This development further lifted steel prices. Although iron ore arrivals in China increased, global iron ore shipments declined slightly last week. Combined with the sharp rise in steel prices and improved profitability at steel mills, China’s hot metal output recently exceeded 2.4 million tons, driving iron ore prices higher.

Falling iron ore inventories at Chinese steel mills also contributed to the price rally. According to market participants, while there have been minimal changes to iron ore fundamentals, positive macroeconomic news and expected demand from the dam project may result in continued high-level price volatility.