China iron ore marks biggest weekly rise in 5 months on supply concerns
China’s iron ore futures ended a wobbly session higher on Friday and gained the most this week since September amid renewed concerns over seaborne supply and despite demand disruptions due to the coronavirus outbreak.
Iron ore on China’s Dalian Commodity Exchange rose 1.0% to 628.50 yuan ($90.01) a tonne, advancing for a fourth straight day, and climbed 6.4% from last week. Singapore iron ore was steady at $86.04 in afternoon trade.
Despite weak demand for the steelmaking raw material in top steel producer China, spot prices extended gains to hit fresh three-week highs on Thursday, with the benchmark 62% grade settling at $88.50 a tonne, SteelHome consultancy data showed.
Traders at Chinese ports were reluctant to sell iron ore at low prices, metals data provider MySteel reported, after Brazilian miner Vale SA on Tuesday scaled down its first-quarter production outlook following heavy rains that hampered operations.
Traders were also hopeful of further stimulus support for the economy, as the coronavirus outbreak showed no sign of peaking, with more than 5,000 new cases added to the tally on Friday.
China’s steel industry is already feeling the pain from sluggish demand amid disruptions to economic activity and restrictions on transportation to restrain the epidemic.
Its severity suggests disruptions “will continue for some time”, Britain-based brokerage SP Angel said in a note.
Steel stocks are rising rapidly as resumption of work at factories and construction sites hinges on the success of virus containment efforts, Sino-Steel Futures Co Ltd in Beijing said in a note.
Companies responsible for 60% of Chinese steel production are located in regions where a directive was given to delay the restarting of operations, according to Justin Smirk, senior economist at Westpac Economic Research in Sydney.
There is still a “high degree of uncertainty surrounding near-term supply and demand conditions” for commodities in China, he said.
* As roadblocks hamper transport of raw materials and steel products, the China Iron and Steel Association appealed to the government for “forceful measures” to keep the mills running.
* China’s iron ore imports in February are running well below preceding months and the corresponding month last year, according to vessel-tracking and port data compiled by Refinitiv.
* Construction steel rebar on the Shanghai Futures Exchange was virtually flat while hot-rolled steel coil gained 0.3%.
* Dalian coking coal was up 0.2% while coke was also little changed.
Source: Reuters (Reporting by Enrico dela Cruz; Editing by Arun Koyyur and Philippa Fletcher)