China Pushing Prices of Iron Ore, Oil and Copper to New Highs

By Joel Scanlon

The Chinese Lunar New Year has seen steel mills stock up on inventory before the holiday period to maintain production. This has led to imports of the three key raw materials for industrial steel production to China rising this month and global prices going up consequently. These raw materials include iron ore, oil and copper.

China’s imports of iron ore rose to a record high of 69 million tonnes in January. This is a rise of 19% from imports in December 2011 and a hike of 48% compared to iron ore imports in January 2010. This brought the price up to $192.5 per tonne inching closer to the $200 mark, a 50% increase in the spot price of iron ore in the last 12 months.

The rise in price of the commodity is welcome news for mining giants BHP Billiton, Vale SA from Brazil and Rio Tinto. Some Chinese traders feel that the rate tip the $200 mark this week but would not stay that high for long.

The import of crude oil by China also went up in the month of January to 5.1 million barrels a day. This is almost five times their import of 1.1 barrels a day in January 2009. This 27 % rise from the daily average a year ago is also contributing to the fourth largest monthly average for Chinese imports of crude oil. The record price of $104.30 a barrel was paid by Chinese stockists which is the highest price since 2008 September.

For copper also similar strong Chinese imports brought up the price by 1.9% brining it to a nominal all time high of $10,168 per tonne. The Chinese imported 364,420 tonnes of copper which is a 25% rise from copper imports in the same time frame last year.