A steady increase in Chinese steel prices at the end of last week pushed 62% Fe iron ore to its highest level in almost five years on Friday 12 April. A spurt in market optimism in China was supported by a large credit expansion in March, while import volumes also recovered.

The Kallanish KORE 62% Fe index gained $0.91/tonne to $95.51/dry metric ton cfr Qingdao, the highest level since August 2014. 170,000 tonnes of PB fines sold in tender at $94.2/t with a laycan in 1-10 May, while on COREX, 170,000t of Carajas Fines sold at $109.5/t with a laycan in 6-15 May. On the Dalian Commodity Exchange September iron ore settled at CNY 652/t ($93.22/t), up another CNY 3/t, while on the Singapore Exchange May 62% Fe futures settled up $1.53/t at $93.83/t In Tangshan, billet prices were again flat at CNY 3,550/t.

China imported 86.42 million tonnes of iron ore in March, up from 83.08mt in February and 85.79mt in March 2018, customs figures show. That left imports over the first quarter down -3.5% to 260.79mt. Mills were planning higher iron ore deliveries for the end of production restrictions at the end of March.

Iron ore markets however are being driven by growing optimism about the Chinese economy. Credit issuance leapt higher in March to CNY 2.86 trillion. The figure confirms what most of the market had already noted, credit is looser and China is taking action to stabilise growth. Economists note however that the bottoming out of credit normally precedes a real improvement in economic growth by two or three quarters. This credit may still take some time before it generates real steel demand, but it has at least restored some confidence to the market.