Iron ore futures soar as supply concerns mount
Iron ore futures surged on Wednesday, with the Chinese benchmark jumping 5%, as the coronavirus outbreak on a bulk carrier at Australia’s Port Hedland reignited fears about supply disruptions.
Iron ore on China’s Dalian Commodity Exchange climbed to its highest close since Sept. 21 at 809 yuan ($118.88) a tonne. It rose 16.6% this quarter, marking its fourth consecutive quarterly gain.
The steelmaking ingredient climbed 3% to $120.28 a tonne by 0724 GMT on the Singapore Exchange.
Renewed supply issues drove prices higher, according to analysts at ANZ, with miner Vale S.A. suspending operations at its Viga concentration plant in Brazil, which will reduce its output by 11,000 tonnes a day.
Meanwhile, a cargo ship was stranded at Port Hedland, one of the world’s largest iron ore loading ports, after 17 of the 21 crew tested positive for the coronavirus, which ANZ analysts said was delaying shipments from the port. Australian soldiers were deployed to help contain the outbreak on the ship that last changed crews in Manila.
However, trading in both ferrous futures and physical markets turned subdued ahead of China’s Oct. 1-8 National Day and Mid-Autumn Festival holidays.
Spot iron ore was steady at $118.50 a tonne on Tuesday, according to SteelHome consultancy. SH-CCN-IRNOR62
The benchmark 62% grade has risen 27% this year, also supported by strong demand as China continued to ramp up steel output, though prospects for further gains are clouded.
“Strong iron ore imports are showing up in higher port inventories. This trend is likely to continue, with shipping data suggesting stronger iron ore exports from Brazil in the near term,” ANZ analysts said.
Construction steel rebar on the Shanghai Futures Exchange climbed 1.1% while hot-rolled coil gained 1%. Stainless steel slipped 0.9%.
Coking coal rose 0.4% and coke jumped 2.9%.