Dalian iron ore futures hit record peaks on Monday as industry data showed port inventory of the steelmaking raw material in China, the world’s top steel producer, dropped to the lowest in more than three years.
The most-traded September iron ore on China’s Dalian Commodity Exchange rose as much as 5.6% to 692.50 yuan ($97.50) a tonne, the contract’s highest since Dalian iron ore trading was launched in 2013.
The Singapore Exchange’s front-month June iron ore contract gained as much as 3.3% to $93.51 a tonne.
Iron ore stockpile at China’s ports was estimated at 111.95 million tonnes as of May 15, the lowest since December 2016, based on data from SteelHome consultancy. SH-TOT-IRONINV
Mounting supply concerns are pushing iron ore prices higher, with spot cargoes of the benchmark 62% grade scaling a two-month peak at $91.70 a tonne on Friday, SteelHome data also showed. SH-CCN-IRNOR62
“The COVID-19 outbreak in Brazil is threatening to disrupt iron ore exports even further,” said Daniel Hynes, senior commodity strategist at ANZ in Sydney.
“The virus is taking hold in Para, which produces around 35% of the country’s iron ore,” he said, referring to the northern Brazilian state.
The outbreak in Brazil, one of China’s biggest sources of iron ore, is the fourth largest in the world, according to official figures.
Iron ore’s rally was also supported by solid economic data, Hynes said, with Chinese steel mills ramping up output in April, data on Friday showed, boosted by robust domestic demand as curbs to contain the coronavirus have been eased.
The overall upbeat market sentiment also pushed China’s steel futures higher.
