Global iron ore prices hit a six-month high of $69.50 a tonne on Tuesday, as Beijing’s policy of cutting excess capacity and pollution in the steel industry has boosted demand for higher quality input materials.
Iron ore, a key component of the alloy steel, has risen 9% since the start of June, according to the Financial Times, when China-US trade tensions began to accelerate. On Tuesday alone the commodity jumped 2.9%, or $1.95, to $69.50 a tonne.
Higher demands for efficiency from China’s government has put a premium on high-grade iron ore, which produces more steel per tonne and is less energy-intensive to process.
China currently imports much of its high-grade iron ore, from Australia and Brazil where mining companies like Rio Tinto and BHP Billiton use it as a major source of income.
Around two-thirds of the world’s iron ore exports end up in China, making it the largest consumer of the commodity. This has fuelled a steadily growing steel industry, which reached a record output of 80.2 million tonnes in June, according to ANZ.