Iron ore jumps on supply concerns, shrugs off China price watch
Iron ore futures rose on Wednesday, with the Dalian benchmark contract gaining up to 5.4% after a three-day slump, as worries over supply boosted prices of the steelmaking raw material.
The most-traded September iron ore on China’s Dalian Commodity Exchange ended daytime trading 4% higher at 1,175 yuan ($183.78) a tonne, after earlier advancing to 1,191.50 yuan.
July iron ore on the Singapore Exchange SZZFN1 rose 1.5% to $203.65 a tonne by 0703 GMT.
Iron ore held on to its gains despite China’s state planner vowing to step up monitoring of commodity prices and market supervision.
Concerns over iron ore supply to top steel producer China also buoyed spot prices, with the benchmark 62% material rising to $209 a tonne on Tuesday, the strongest since May 19, based on SteelHome consultancy data.
Iron ore inventory at Chinese ports dropped to 127.65 million tonnes last week, the lowest since Feb. 5, while shipment arrivals were lower than the prior-week and year-ago volumes, according to metals data provider SMM.
Shipments from top iron ore miner Rio Tinto RIO.AX were seen declining, while Brazil’s Vale SA VALE3.SA has interrupted production at two mines over safety concerns, reducing its output by 40,000 tonnes a day.
“We should start seeing the impact of this week’s stoppage in next week’s export numbers,” RBC Capital Markets mining analyst Kaan Peker said in a note.
“We anticipate marginal weaker (month-on-month) imports from Brazil and Australia,” he said, adding that Indian volumes “had been impacted by wet weather”.
On the demand side, some analysts said the outlook for Chinese steel products remained bright despite subdued May trade data, citing a solid global economic recovery that will likely boost Chinese exports.
Construction steel rebar SRBcv1 on the Shanghai Futures Exchange SRBcv1 rose 1.3%, while hot-rolled coil SHHCcv1 gained 2.1%. Stainless steel SHSScv1 added 2.1%.
Dalian coking coal DJMcv1 jumped 2.3%, while coke DCJcv1 climbed 4.2%.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; additional reporting by Melanie Burton in Melbourne; Editing by Ramakrishnan M. and Subhranshu Sahu)