Dalian iron ore futures jumped as much as 7.5% on Monday as port inventory of the steelmaking raw material in China, the world's top steel producer, dropped to the lowest in more than three years, adding to concerns over supply.
The most-traded September iron ore on China's Dalian Commodity Exchange ended the session up 5.4% at 691.50 yuan ($97.22) a tonne, marking its biggest one-day gain since July 9, 2019.
The contract surged to as high as 705 yuan earlier in the session, its strongest since Dalian iron ore trading was launched in 2013.
The Singapore Exchange's front-month June iron ore contract rose 3.4% to $93.57 a tonne in afternoon trade.
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.
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.
“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.
That added to worries about supply from Brazilian iron ore miner Vale SA, whose operations have also been hindered by the epidemic. The outbreak in Brazil, one of China's biggest sources of iron ore, is the fourth largest in the world.
Can India’s ‘zero-for-zero’ approach tackle US reciprocal tariffs? Here’s it's context, impact and more
Primary aluminum alloy market weak recovery in off-season: when will spring arrive
