Dalian iron ore futures surged past $100 a tonne on Thursday, recovering lost ground as concerns about tightening supply of the steelmaking commodity from coronavirus-hit Brazil prevailed over a bleak outlook for global steel demand.
Iron ore on the Dalian Commodity Exchange closed 2.1% higher at 722 yuan ($101.67) a tonne, rising for a seventh straight session.
The Singapore Exchange’s front-month contract also clawed back early losses, up 1.7% at $95.42 a tonne in afternoon trade.
After Brazilian iron ore miner Vale SA cut its 2020 production outlook to 310 million-330 million tonnes, from 340 million-355 million tonnes previously, “more downgrades may be on the way as COVID-19 infections accelerate in Brazil’s key mining provinces”, said Morgans Financial Ltd in a note.
Hopes of more government stimulus to prop up China’s economy added fuel to the rally that has pushed the Dalian benchmark up over 20% this year.
Benchmark spot 62% iron ore bound for China climbed to $98.20 a tonne on Wednesday, the highest since Aug. 6, SteelHome consultancy data showed.
Iron ore’s advance, however, “looks increasingly stretched” as the market faces downside risks such as a sharp fall in global steel demand this year and increased shipments from Brazil and Australia when the pandemic eases, ANZ commodity strategists said.
* Concerns emerged that the flow of Australian iron ore to China could also be hampered because of trade tensions between the two countries.
* The Australian government, however, said the change in China’s iron ore inspection procedures, announced on Wednesday, should streamline customs clearance of Australian shipments, reassuring markets worried about their deteriorating ties.
* Construction steel rebar on the Shanghai Futures Exchange rose 0.8%, while hot-rolled coil gained 0.6% and stainless steel advanced 1.4%.
* Coking coal was up 0.4%, while coke climbed 1.5%.
Source: Reuters (Reporting by Enrico dela Cruz; Editing by Devika Syamnath and Sherry Jacob-Phillips)