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Iron ore prices rise on Australian supply concerns

Ukraine / Mining industry

Experts also expect record Chinese iron ore imports in January

Iron ore prices rise on Australian supply concerns

Rise in iron ore prices is largely due to two factors that have yet to emerge: a resumption of the construction boom in China and possible supply disruptions in Australia's largest exporter.

Rio Tinto, BHP Group and Fortescue Metals Group, Australia's largest iron ore producers, have noted likely disruptions to their operations. There are fears that supplies from Australia will be affected by the Omicron coronavirus variant breaking through the "walls of the fortress" in the state of Western Australia, which has so far been one of the few jurisdictions in the world that have contained COVID-19 with strict border controls.

An additional concern for Australia's iron ore production is the approaching cyclone season, which could be more severe than usual due to the La Niña weather event, which has resulted in severe storms in the past.

Commodity advisors Kpler also expect China's record iron ore imports in January, with data showing 117.42 million tonnes. The official figures are likely to have some difference as not all cargo unloaded in January can be assessed as having cleared customs this month.

Stable imports of iron ore to China provide hope for current growth, and strong construction activity is also expected in the coming months.

Steel production in China may be limited until March, given the push to limit pollution due to the Beijing Winter Olympics and the upcoming week-long Lunar New Year holiday.

However, once this period is over, steel demand is expected to rise as construction approaches its summer peak and Beijing works to stimulate the economy to meet growth targets.

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