China iron ore futures sustain rally on Brazil supply concerns

Dalian iron ore futures rose for a sixth straight session on Wednesday, hitting $100 a tonne, as concerns over supply from Brazil and China’s strong appetite for the steelmaking raw material pushed spot prices to an eight-month high.

The Dalian Commodity Exchange’s most-traded September iron ore contract rose 2.3% to 714 yuan ($100.56) a tonne.

Benchmark spot 62% iron ore bound for China, the world’s top steel producer, climbed to $97.20 a tonne on Tuesday, the highest since Sept. 16, SteelHome consultancy data showed. SH-CCN-IRNOR62

The Singapore Exchange’s front-month June contract, however, dropped 0.7% to $92.58 a tonne.

Brazil, one of the world’s major iron ore suppliers, has the third-highest number of cases globally, and an industry association has warned of a hit to the country’s mining output if the disease’s spread is not curbed.

The epidemic may keep Brazilian supply from rebounding significantly in the near term, according to data provider Shanghai Metals Market, which projected a 560,000-tonne weekly drop in its May 10-16 shipments.

But, slowing spot steel demand in China may temper iron ore’s rally in the short term, Marex Spectron’s analyst Hui Heng Tan said, citing a slow restart of downstream activities.