China’s iron ore futures edged higher on Wednesday, extending gains for a third straight day as traders assessed the disruption to supply following a fire at a Rio Tinto export terminal in Australia.
Rio Tinto said on Monday it had declared force majeure on iron ore shipments to some customers following the fire at its Cape Lambert export terminal last week.
The most traded iron ore contract on the Dalian Commodity Exchange rose as much as 1.4 percent to 516 yuan ($76.22) a tonne in early trade.
Helen Lau, an analyst at Argonaut Securities in Hong Kong, said the uptrend in iron ore prices has been driven by both the supply disruption and expectations of a boost in demand for the steel-making raw material from Beijing’s moves to stimulate the slowing Chinese economy.
“China’s stimulus measures may boost steel production and that will support iron ore demand,” she said. “The supply disruption in Australia is adding some supply concern and that explains why the price went up.”
Cape Lambert is one of two ports Rio uses to ship iron ore from Australia’s Pilbara mining region. The port has an annual iron ore shipping capacity of 205 million tonnes, according to the miner’s website.
Coking coal, however, fell 1.0 percent to 1,226.5 yuan a tonne as of 0237 GMT, extending losses after recent gains. Coke was up a marginal 0.1 percent at 2,014 yuan.
The most-active rebar contract on the Shanghai Futures Exchange was down 0.2 percent at 3,527 yuan a tonne. Hot rolled coil was up just 0.1 percent at 3,425 yuan in listless trade.
“There are still some short-term headwinds in the steel market. It’s mainly because of the weak (demand) seasonality during the winter time, before the Chinese New Year,” Lau said.
Spot iron ore for delivery to China SH-CCN-IRNOR62 was steady at $74.80 a tonne on Tuesday, according to SteelHome consultancy.
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