The growth in China’s iron ore stockpile addition this year has already surpassed 2016’s total increase, according to research firm SteelHome.
Iron-ore in China’s ports expanded for the fourth consecutive week to 136 million tons, the Chinese firm said. The country has 1.75 million tonnes in the week to May 19, taking additions this year to 22.05 million tonnes, surpassing the 20.85 million added last year.
While Chinese steel production soared to a record in April, port stockpiles of ore are a sign of ample supplies. Increasing production of iron ore and mounting stockpiles in China, the biggest consumer of the metal, is one reason why analysts are calling for prices to soften.
Still, increased steel production has supported iron ore prices. Iron ore spot markets have climbed in four out of the past five sessions and hit a two-week high in the process.
This chart from SteelHome shows the mounting stock piles
The price for benchmark 62% fines rose by a further 0.8% to $63.19 a tonne, according to Metal Bulletin, extending the gains from May 8 to over 5%.
And Commonwealth Bank of Australia, the nation’s biggest lender, is predicting demand for Australian iron ore and coking coal will continue to increase.
The bank forecast Chinese steel output will expand to accommodate stronger domestic demand.
Steel consumption in the world’s second-largest economy will likely grow at 2-3% as policymakers look to backstop growth with infrastructure investment ahead of elections later this year, according to Vivek Dhar, mining and energy analyst at the Commonwealth Bank.