A bucket wheel reclaimer collects iron ore from a stockpile at Fortescue Metals Group Ltd.’s Herb Elliott port facility in Port Hedland, Australia, on Wednesday, Oct. 26, 2016. Photographer: Brendon Thorne/Bloomberg
After what’s been a very tough quarter, iron ore’s getting a reprieve. Benchmark spot prices have clawed their way back above $60 a metric ton after rebounding from a one-year low as steel output holds up in China, buoying demand for the material even as supply rises.
Spot ore with 62 percent delivered to Qingdao rose 4.4 percent to $62.33 a dry ton, the highest in five weeks, according to Metal Bulletin Ltd. The gain followed a jump in futures, with the SGX AsiaClear contract rallying 4.1 percent, and the Dalian Commodity Exchange’s price holding gains. Mining shares advanced, including BHP Billiton Ltd. and Rio Tinto Group.
The commodity’s uptick this week has pared losses seen this quarter spurred by concern over rising production, especially of low-cost supply, and China reining in leverage. Premier Li Keqiang said on Tuesday that Asia’s biggest economy is on track to meet growth targets. Both steel coil and rebar in China are headed for gains in June after a multi-month run of losses.
“After the recent sell-off, iron ore’s due for a rebound and is gaining favor with funds,” Maike Futures Co. analysts Dang Man and Ren Jiaojiao said in a note. “An improvement in profit margins has incentivized steelmakers to sustain production,” they said. China makes half of the world’s steel.
Steel extended gains on Wednesday, with reinforcement-bar futures closing 1.7 percent higher in Shanghai, and hot-rolled coil adding 1.2 percent to a three-month high. Spot iron ore, which bottomed at $53.36 on June 13, remains 22 percent lower this quarter, the most since the final three months of 2015.
Miners climbed in Sydney. Rio Tinto rose 2.5 percent as BHP Billiton added 1.9 percent, with both stocks capping their fifth consecutive daily gain. Fortescue Metals Group Ltd. increased 4.1 percent, up for a third session. They are Australia’s biggest exporters.
Source: BloombergPrevious Next