Iron ore prices have firmed up recently amid announcements from China’s Politburo. The Chinese Government has announced a step up in its economic stimulus plan of 1 trillion Yuan, aimed primarily at infrastructure projects. This announcement can be seen as a sign that the Chinese Government is tilting away from stimulating its property industry as a means of revitalising its downtrodden economy. In addition to this, high-grade iron ore (62%+) remains in short supply to an ever-growing market focused on Net Zero Carbon Emission goals. High grade iron ore is critical in the creation of what is termed “Green Steel”, as the process used cannot utilise lower grades, which make up approximately 95% of iron ore supply.

With pressures rising on companies to go “green”, the need for high-grade iron ore is almost certain to increase. Will this result in a sustained increase in iron ore prices? Possibly, but for the time being iron ore prices remain closely tied to China and its economic ambitions.