Dalian iron ore jumps over 3% on tight supply worries
Iron ore futures in Asia rose on Tuesday, with the benchmark Dalian contract advancing by more than 3%, as lingering concerns about tight supply of the steelmaking raw material eclipsed expectations of a slowdown in China’s steel demand.
The most-traded September iron ore on China’s Dalian Commodity Exchange gained as much as 3.5% to 1,227.50 yuan ($189.87) a tonne.
Iron ore’s most-active August contract on the Singapore Exchange jumped 1.5% to $210.95 a tonne.
A consensus is emerging among industry leaders and market analysts that China’s steel demand will ease in the second half of 2021, which may slow mills’ iron ore purchases.
“The growth of China’s steel demand in the second half will be slower than the first half,” said Wang Yingsheng, chief economist of the China Iron and Steel Association (CISA), while speaking at the opening ceremonies for the three-day Singapore International Ferrous Week.
Unfavourable weather in top steel producer China has slowed construction activity, while demand for manufacturing-used steel will also drop as export orders fall, said Wang.
“As we enter the second half of the year, all eyes will be on the extent to which Chinese demand slows and Brazilian supply grows,” said Rohan Kendall, iron ore research head at Wood Mackenzie.
“Progress is slow-going for Vale on its ‘pathway to 400 million tonnes per year’,” he said, referring to the Brazilian iron ore miner’s struggle to increase output, which declined following a dam collapse in 2019.
As shipments from miners fell, China’s iron ore imports dropped for a third straight month in June.
Benchmark 62%-grade iron ore’s spot price in China remains well supported above $200 a tonne. SH-CCN-IRNOR62
Construction steel rebar on the Shanghai Futures Exchange SRBcv1 was down 1.3% by the end of morning trade, while hot rolled coil SHHCcv1 slipped 0.8%. Stainless steel SHSScv1 edged up 0.1%.
Dalian coking coal DJMcv1 climbed 2.6%, while coke DCJcv1 was virtually flat.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila and Min Zhang in Beijing; Editing by Subhranshu Sahu)