While iron ore prices might be on a short-term tear, global steel production is not.
Data released by the World Steel Association overnight revealed that global steel production slipped to 135 million tonnes in April, a decrease of 1.7% on a year earlier.
In the chart, global figures are reflected in blue, those from China in purple and global ex-China in yellow.
China, the world’s largest steel producer, saw production fall to 68.9 million tonnes, 0.7% lower than April 2014, while Japan, the second largest producer globally, saw production collapse by 6.1% to 8.4 million tonnes.
While the spot iron ore prices fell by a significantly larger amount over the same time period – some 46.7% – with steel production weakening and global seaborne supply continuing to grow, it will be interesting to see how long the iron ore rally can last in light of deteriorating fundamentals.