Iron ore prices rebounded to above the US$110 per ton level yesterday (March 16), hitting a 20-month high despite a drop in China’s crude steel and steel products output in the first two months of the year.

Although China’s crude steel production fell by 3.6% year on year to 160 million tons in the period, improved economic indicators, including a 6.3% rise in the national value-added industrial output, revitalized market sentiment.

The price of 62% Fe grade iron ore fines from Australia shipped to China rose to US$110.05, extending the growth that saw prices jump by 5.7% last week. Besides domestic data, rising shipping costs due to Middle East tensions and mill restarts following the Two Sessions in China provide price floors.

Although peak demand season is still pending, market participants expect iron ore prices to maintain their current high-level volatility in the near term.