China’s iron ore fluctuated. Will it bring more gain?

China saw substantial profits from its iron ore industry as the commodity’s price surged forward in recent weeks. Traders are driving its value even higher. However, such bullish trading contains some risks. The market participants are questioning its validity, fearing that the price might plummet as quickly as it has arisen.

On Wednesday, benchmark 62% iron ore prepared for delivery to north China dropped to $121.60 a tonne, hitting a two-month low. Overall, its price has shaved off 8.8% since reaching its peak in June 2022. The commodity’s price skyrocketed to $133.40 a tonne on March 15. Afterward, the spot price lowered substantially, but it’s still higher by 54% compared to the last year’s low of $79 a tonne.

China was one of the last countries to open its economy after the coronavirus pandemic. Its government maintained various restrictions and lockdowns for the longest period. However, after the reopening, the market sentiment improved significantly, with investors expecting to see a fast economic recovery. Some experts think that such a mood contributed to the iron ore’s rally, bolstering the demand for the commodity.

China purchases approximately 70% of seaborne volumes of steel raw materials worldwide. That also played a role in the iron ore’s sudden success. But the rally soared out of proportion after Beijing stopped its strict zero-coronavirus policy at the end of 2022.

Will the iron ore price continue climbing, or will its rally end soon?

China increased imports recently, and the iron ore price soared proportionally. The official data showed that imports jumped by 7.3% compared to the same period a year earlier, reaching 194.2 million tonnes in the first two months of 2023.

Analysis except the country to maintain the same pace in March. However, after that, the iron ore price might start declining. Some experts claim that the commodity’s current price is too high to remain at the same point for long.