China iron ore marks best week in over 8 months on supply concerns

Chinese iron ore futures rose for an eighth straight session on Friday, marking their best week in more than eight months, as strong domestic demand and tightening supply of the steelmaking commodity from Brazil drove spot prices to a nine-month high.

The Dalian Commodity Exchange’s most-traded iron ore contract climbed 0.8% to 716.50 yuan ($100.53) a tonne, closing well off the day’s high but defying overall downbeat sentiment in the metals markets.

The Chinese benchmark advanced 9.2% this week, its strongest weekly gain since early September. Iron ore on the Singapore Exchange fell 1.1% to $94.50 a tonne in afternoon trade, after topping %96 earlier in the day.

Increased domestic iron ore demand and hopes of more infrastructure spending by the Chinese government have fuelled the rally in both futures and spot prices.

Benchmark 62% iron ore bound for China rose for a fourth consecutive day to hit $98.70 a tonne on Thursday, the highest since Aug. 6, SteelHome consultancy data showed. SH-CCN-IRNOR62

“Iron ore demand continued to grow at a high rate,” Sinosteel Futures Co Ltd said in a note, citing consultancy Mysteel’s survey of 247 Chinese steel mills with a higher blast furnace operating rate this week of 90.49%, and declining port stockpiles.

While China pledged more government spending as the COVID-19 pandemic hammers the world’s second-biggest economy, Beijing dropped its annual growth target for the first time, setting a sombre tone to this year’s meeting of parliament.

Offering support to iron ore were potential further disruptions in supply from Brazil, where the coronavirus infections have rapidly accelerated, hitting key mining provinces.