As steel mills currently adopt a strategy of low iron ore inventories, the increase in iron and steel production is likely to result in stronger upward momentum for iron ore prices in the short term compared to steel prices, sources said.

Steel mills typically aim to maintain enough iron ore stocks for about 10 days of production, with some having enough for only three to five days, some sources said. But as the market has entered the high-demand season, mills are generally holding steel order bookings for around 15-20 days of production.

That means a quick boost to steel production can easily affect market sentiment, lending a stronger boost to iron ore prices than steel in the short term.

On March 14, China’s National Development and Reform Commission officially called for the continued implementation of crude steel production controls for 2025. Although there is still no substantial information about production cuts, NDRC’s call still boosted market sentiment.

As of mid-March, the average utilization rate at China’s blast furnaces reached about 87%, up from 86% in late February and around four percentage points higher year over year, according to trade sources. The increase in blast furnace utilization is expected to gain pace in late March.