Iron ore prices have risen to record highs in recent weeks, largely because supply has not been able to keep pace with demand in China, where crude steel production has grown by 30% over the past five years.

Unless China drastically cuts steel output – which seems unlikely as Q1 output rose 16% on year – or global iron ore supply increases significantly, it is difficult to see what will cause benchmark prices to retreat to consensus views of around $100/mt in the next 12-24 months.

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