China iron ore futures fall as Brazil supply prospects brighten
Dalian iron ore futures fell on Wednesday on rising shipments from the world’s biggest suppliers of the steelmaking ingredient, including Brazil, and weakening demand in top steel producer China ahead of the Lunar New Year holiday.
Iron ore on China’s Dalian Commodity Exchange ended daytime trading 0.9% lower at 948 yuan ($146.77) a tonne, down for a second straight session.
Global iron ore supply had been tight since the 2019 tailings dam collapse at Vale SA’s Corrego do Feijao mine in Brazil, which prompted mine closures there for safety checks.
That added to the upward pressure on prices last year, pushed higher mainly by China’s stimulus-driven demand for the raw material.
“Brazil is off to a good start in 2021 and we expect the country to regain some of the lost market shares this year,” said Erik Hedborg, iron ore analyst at CRU in London.
Brazil’s iron ore exports in January reached 29 million tonnes, compared with 26.7 million tonnes in the same month last year.
Brazil’s supply looks set to improve further as Bahia Mineracao commenced production at a mine with expected 2021 output of 1 million tonnes.
Higher shipments from top producer Australia also helped improve the overall supply outlook, with exports from the Pilbara region rising 2% year-on-year last month.
Spot iron ore traded at $150 a tonne on Tuesday, the lowest since Dec. 9, SteelHome data showed.
However, iron ore on the Singapore Exchange rose 1.4% to $146.35 a tonne by 0710 GMT. Strong steel production outside China should keep iron ore demand resilient, ANZ analysts said.
With steel spot trades light ahead of the week-long Chinese New Year holiday from Feb. 11, rebar on the Shanghai Futures Exchange slipped 0.2%, hot-rolled coil finished flat, while stainless steel slumped 1.2%.
Coking coal dipped 2.1% while coke dropped 1%.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Devika Syamnath and Uttaresh.V)