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The fast-rising scrap market has outpaced iron ore prices, making iron ore the most cost-effective raw material for mills. Based on the analysis, domestic scrap is statistically $31/mt overvalued, when compared with iron ore (using historical pricing data from May 2013 to February 2018).

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Iron ore is the raw material used to make pig iron, which is one of the main raw materials to make steel—98% of the mined iron ore is used to make steel. Indeed, it has been argued that iron ore is "more integral to the global economy than any other commodity, except perhaps oil".

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Iron ore prices have fallen heavily in recent weeks, especially for higher quality, higher cost grades. Chinese steel mill profitability has collapsed, falling to the lowest levels since May last ...

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Chinese mills were heard to be running quite low on iron oreinventories, having not actively been procuring raw material for the pastmonth and a half. A Beijing-based trader said the market would see more firmness becausean increasing number of Chinese mills were displaying an interest inrestocking iron ore.

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