Iron ore prices rose back above the US$106 level yesterday (January 6). Although Chinese steel prices are still weak, a decrease in global iron ore shipments and rising molten iron production in China drove the recovery. The price of 62% Fe grade iron ore fines from Australia shipped to China rose by US$0.75, reaching US$106.55.

Several factors support this bounce. Global miners reduced cargo volumes after the fiscal year ended, while Chinese mills began replenishing low inventories ahead of the Lunar New Year. Besides, low output from the Simandou project tightened supply. Although port stockpiles are growing and downstream steel demand remains sluggish, market participants expect prices to fluctuate at these higher levels as pre-holiday restocking continues.