Dalian iron ore futures rose for a sixth straight session on Wednesday 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 ended up 0.9% at 704.50 yuan ($99.17) 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 1.8% to $91.53 a tonne in afternoon trade.
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.
“We continue to pick up de-stocking of raw material at the end-user which would imply poor expectations of forward demand,” Tan said in a note.
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