China iron ore rises for 7th day as supply worries persist
Iron ore futures in China rose for a seventh straight session on Wednesday amid lingering concerns over tightening seaborne supplies, even as miner Fortescue Metals Group maintained its shipments’ estimate for fiscal 2020.
Iron ore on the Dalian Commodity Exchange ended up 1.1% at 645.50 yuan ($92.22) a tonne after rising up to 646.50 yuan per tonne — a one-month-high. Iron ore on the Singapore Exchange edged up 0.2% to $87.18 in afternoon trade.
“Supply issues outweighed the demand concerns for iron ore,” commodity strategists at ANZ said in a note.
Fortescue expects full-year iron ore shipments to be at the upper end of the 170 million tonnes-175 million tonnes range despite supply disruptions in Western Australia due to infrastructure damage caused by tropical cyclone Damien.
Despite the coronavirus epidemic in China that has hampered global business, the Australian miner said its iron ore shipments were proceeding on schedule.
Citing cyclone damage, Anglo-Australian miner Rio Tinto on Monday lowered its 2020 shipment forecast for the steelmaking raw material from Australia’s Pilbara region.
Last week, miner Vale SA scaled down its first-quarter iron ore production outlook following heavy rain in Brazil that hampered its operations.
Supply concerns also lifted spot prices of China-bound iron ore to one-month highs, with the benchmark 62% grade settling at $91.50 a tonne on Tuesday, based on data from SteelHome consultancy.
With their profit margins squeezed, some Chinese steelmakers are looking to reduce output, or might bring forward scheduled maintenance, as product inventories pile up because of factory shutdowns and transport restrictions to contain the epidemic.
BHP Group , the world’s biggest miner, warned this year’s iron ore demand could take a hit if the fallout from the virus outbreak in top steel producer China extended beyond March.
* “We are confident in the strength of the Chinese economy, with the government maintaining its commitment to growth targets led by further stimulus and infrastructure investment,” Fortescue Chief Executive Officer Elizabeth Gaines said.
* Construction steel rebar on the Shanghai Futures Exchange slipped 0.4%, while hot-rolled coil shed 0.5%.
* Stainless steel was down 0.6%.
* “The transaction volume within the spot stainless steel market is very thin now and … prices, which declined only 2% year-to-date, have yet to reflect the weaker market conditions,” said Argonaut Securities analyst Helen Lau.
* Coking coal rose 0.9%, but coke dropped 0.7%.
Source: Reuters (Reporting by Enrico dela Cruz, Editing by Sherry Jacob-Phillips and Uttaresh.V)