Iron ore surged to a 10-month high on resilient demand in China and BHP Billiton Ltd.’s plan to ease back on supply growth.
Ore with 62 percent content delivered to Qingdao climbed 3.1 percent to $64.77 a dry metric ton on Wednesday, according to Metal Bulletin Ltd. data. Futures on China’s Dalian Commodity Exchange jumped as much as 4.8 percent to 454.5 yuan ($70.30) a ton, while the SGX AsiaClear contract rallied as much as 5 percent to $60.48 a ton, rising for a third day.
After three years of sliding prices, iron ore advanced in 2016 as China’s steel output rose to a record, policy makers said they’d support growth and the property sector improved. BHP, the world’s biggest miner, and Rio Tinto Group, the next largest, cut their output forecasts this week, adding to bullish signals. The greenback’s slide to a 10-month low has also bolstered sentiment, as dollar-denominated commodities become less expensive in other currencies.
“Higher steel prices have provided a short-term sentiment boost to iron ore,” said Helen Lau, an analyst at Argonaut Securities (Asia) Ltd. The rally may run out of steam as there will still be additional supply from the major producers this year, she said.
BHP said on Wednesday that output from its mines in Western Australia may be 260 million tons this fiscal year, down 4 percent from its previous guidance, amid disruptions from bad weather and rail network maintenance. Rio lowered its forecasts for 2017 on Tuesday, citing delays in implementing a driverless train system in the Pilbara region. The reductions may see market sentiment turn more positive, UBS Group AG said.
Source: BloombergPrevious Next