Iron ore outperformed all commodities in 2020, more than doubling to record highs on strong Chinese steel demand.

As the world’s largest producer of steel at 1.1 billion tonnes in 2020, China imports 60% of its iron ore from Australia. Bilateral relations between the two countries soured earlier this year after Australia supported a growing call for an international inquiry into China’s handling of the coronavirus pandemic. The ongoing tensions have not had a big impact on the iron ore trade so far.

Rally

Iron ore prices have more than doubled in 2020, putting the steelmaking raw material on track to be the top-performing major commodity globally for a second straight year as speculative money floods in and Chinese demand holds firm.

The most active iron ore futures on the Dalian Commodity Exchange have gained 37.8% this quarter and 21.5% in December alone.

Some market analysts, Stockhead reported, expect prices to moderate over the next two years. 

According to the newspaper, S&P Global Ratings said in a report on Vale it expects iron ore prices to average $85 per tonne in 2021 and $70 per tonne in 2022.