Recent iron ore news highlights a potential buying opportunity for FTSE mining shares Rio Tinto, BHP Group, and Anglo American. However, questions remain about China's demand situation.
Iron ore has experienced a volatile Covid-19 pandemic along with the help of the 2020 major Chinese industrial push, which led to a 140% increase in prices in the 15-month period until May 2021. However, this uptrend abruptly ended when prices dropped below $55. Nonetheless, the first two weeks of October provided some grounds for optimism as iron ore prices increased.
Economic activity in China continues to be a critical factor for iron ore prices, triggered by the Covid-19 pandemic that sparked an economic boom in 2020. Instead, most of 2021 saw a sharp drop in industrial production, especially after a strong quarter. More importantly, we saw a drop in steel production, which pushed down iron ore prices. The long-term trend for China's steel production is upward, and therefore, as economic restrictions ease, it is likely that we will see things improve.
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