Iron ore market torn between demand concerns, supply disruptions
Chinese iron ore futures ended little changed on Tuesday, torn between demand concerns due to broader restrictions across the world to contain the coronavirus pandemic and rising chances of reduced supply of the steelmaking raw material.
Iron ore on the Dalian Commodity Exchange finished at 639.50 yuan ($90.40) a tonne, up 0.2% after falling as much as 3.1% earlier in the session to its lowest since March 2. Futures on the Singapore Exchange rose 3.7% in afternoon trade.
Spot prices for the steelmaking raw material dropped to six-week lows on Monday amid the heavy sell-off in futures markets, with the benchmark 62% grade settling at $84.50 a tonne, the lowest since Feb. 10, as assessed by SteelHome consultancy.
China’s iron ore and steel futures struggled for direction despite the recovery of industrial metals and equities, which rebounded following the scaling up of monetary and fiscal policy support for economies hammered by the pandemic.
“Investors are reassessing the effectiveness of the stimulus plans,” commodity strategists at ANZ said in a note.
However, they said Brazilian miner Vale SA’s move to suspend operations at its distribution facility in Malaysia “could potentially take some downward pressure off iron ore prices”.
Vale, one of China’s major iron ore suppliers, said on Monday it would halt operations at its Teluk Rubiah distribution terminal in Malaysia, which is expected to reduce sales in the first quarter by roughly 500,000 tonnes of iron ore.
The operations were scheduled to be suspended from Tuesday through March 31 to ensure safety of Vale’s workers amid the pandemic, but the miner said the move would not affect its production and sales in 2020.
* Construction steel rebar on the Shanghai Futures Exchange also rebounded from earlier losses to end 0.4% higher, while hot-rolled coil climbed 1.5% but stainless steel slipped 0.1%.
* Coking coal gained 1.9% and coke jumped 1.6%.
* Iron ore producer Rio Tinto has joined other miners across the world that are moving to slow down operations amid tighter restrictions to contain the epidemic.
* Global crude steel production rose 2.1% to 142.4 million tonnes in February from a year earlier, World Steel Association data showed on Monday, with China accounting for 53% of the total output.
Source: Reuters (Reporting by Enrico dela Cruz; Editing by Aditya Soni and Uttaresh.V)