Iron ore price rebounded on Monday after plunging late last week, since latest official data indicated record steel output in China last month, and subsequently, high demand for the steelmaking ingredient.

Australian iron ore fines 62% Fe surged by $8.5/t to $217.5/t CFR, though its futures on the DCE added just RMB 24.5/t ($3.8/t) from Friday.

The increase in futures is modest, compared to spot market, because it was affected by more pessimistic outlook for steel demand in summer.

Summer traditionally is low season for construction activity and steel demand in China due to the rainy season in southern provinces. However, the raw material tags went up in both paper and physical markets, since steel production in China reached a new historical record last month.

The data by the National Bureau of Statistics revealed that Chinese mills produced 97.85 million t in April, adding 4.1% m-o-m and 13.4% y-o-y and beating the previous record registered in August 2020 (94.85 million t).

An all-time high was reached despite multiple production restrictions and governmental inspections in China’s largest steelmaking cities. Moreover, steel output continued to rise in China in early May, providing strong support to iron ore demand.