UPDATE 1-China iron ore extends red-hot rally, logs best week in 8

  • Reuters
  • Stock Market News
UPDATE 1-China iron ore extends red-hot rally, logs best week in 8
Credit: © Reuters.

* Benchmark iron ore soars 10 pct this week

* Supplies from Brazil, Australia drop sharply

* Steel mills' restocking also supports price (Updates with closing prices, graphic)

By Enrico Dela Cruz

MANILA, April 4 (Reuters) - Dalian iron ore futures extended their rally into a fifth session on Thursday, as declining shipments from Brazil and Australia amid higher demand in China indicated tightening supply of the steelmaking raw material.

The most-traded May 2019 contract on the Dalian Commodity Exchange DCIOcv1 rose 1.1 percent to 687.5 yuan ($102.40) a tonne. It hit an intraday high of 694.5 yuan in the previous session, the loftiest for China's benchmark iron ore since 2013 when it launched futures trading for the commodity.

The benchmark's 10 percent gain this week is its best since the last week of January. There will be no trading on Friday, April 5, as China's markets are closed for the Tomb Sweeping Day holiday.

Spot iron ore supplies in China are expected to tighten further amid reduced shipments from Brazil and Australia and improving demand from steel mills, said commodity broker Marex Spectron.

Spot iron ore for delivery to China SH-CCN-IRNOR62 , with 62 percent fines, rose 1.7 percent to $91.50 a tonne on Wednesday, according to SteelHome consultancy.

The decline in iron ore arrivals into China in recent weeks was "more significant" than what was seen earlier this year when cyclone Riley hit port operations in Australia, Marex Spectron said in a note.

Brazil's iron ore exports in March totalled 22.18 million tonnes, 23 percent lower than February and 26 percent down from a year ago, as top miner Vale SA's VALE3.SA operations were disrupted following a fatal tailings dam disaster in January. ore shipments to China from Brazil and Australia in the first quarter were 7-8 percent lower than year-ago volumes, and were down by double-digit rates from the previous quarter, said analyst Helen Lau of Argonaut Securities.

The price rally has been supported by "solid" steel demand, she said.

"Blast furnace utilisation rates in (steelmaking) Hebei province in April are expected to increase as there is less pressure for environmental protection," Lau said.

Australia's iron ore miners such as BHP Group Ltd BHP.AX , Rio Tinto (LON: RIO ) RIO.AX and Fortescue FMG.AX have reduced their output or shipment estimates after cyclone Veronica hit their operations towards the end of March.

Some industry websites reported on Thursday that another cyclone was forming and could hit ports in Australia next week, potentially further disrupting iron ore shipments.

Iron ore restocking by Chinese steel mills remains lacklustre, according to Marex Spectron, though it expects such weakness to be "transitory as margins rise and mills typically step up production during this time of the year."

The most-active construction steel rebar contract on the Shanghai Futures Exchange SRBcv1 edged up 0.6 percent to 3,594 yuan a tonne. Hot rolled coil SHHCv1 , used in cars and home appliances, climbed 1.2 percent to 3,846 yuan.

Coking coal on the Dalian exchange DJMcv1 edged up 0.3 percent to 1,247.5 yuan a tonne, while coke DCJcv1 gained 0.4 percent to 2,026.5 yuan. ($1 = 6.7139 Chinese yuan)

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Dalian iron ore and Shanghai rebar prices



Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

Error: File type not supported

Drop an image here or


Related Articles