BEIJING: Chinese iron ore futures surged on Monday, marking the biggest intraday percentage gain since July 2019, as supply concerns deepened after the country's second-biggest iron ore supplier Brazil shut down a Vale complex due to coronavirus concerns.
A Brazilian judge ordered the closure of a series of mines operated by Vale SA in Itabira after 188 workers tested positive for the coronavirus, putting more than 10% of the firm's iron ore output offline.
The most-traded September contract of iron ore futures on the Dalian Commodity Exchange soared as much as 7.6% to 798 yuan ($112.74) per tonne, the biggest percentage change since July 9, 2019. It closed up 5.5% at 783 yuan a tonne.
Vale has reaffirmed its iron ore output guidance and said it is keeping its monthly production forecast at Itabira at 2.7 million tonnes for coming months.
But if the closure is sustained, iron ore supply disruptions could be larger than last year after the tailings dam disaster, said Wu Shiping, an analyst at Tianfeng Futures.
"We are also not seeing any signs of weak demand for now even as the rainy season is coming," Wu added.
The most active construction rebar on the Shanghai Futures Exchange, for October delivery, edged up 0.4% to 3,616 yuan per tonne.
Hot-rolled coils, used in the manufacturing sector, rose 1.1% to 3,542 yuan a tonne.
Spot prices of iron ore with 62% iron content for delivery to China fell by $1.5 to $100.5 per tonne on Friday.
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