Iron ore drifts lower amid volatile geopolitical climate

SINGAPORE: Iron ore futures edged down as traders remained cautious amid a tepid geopolitical backdrop, though recovering hot metal output and rising inventories suggest prices still have room to grow.

The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) traded 0.51% lower at 788 yuan ($113.29) a metric ton, as of 0312 GMT.

The benchmark February iron ore on the Singapore Exchange was 0.93% lower at $103.6 ton.

Traders generally remained cautious amid a volatile global geopolitical environment and are taking a more defensive stance as Singapore iron ore prices stay below $105 a ton, a trader familiar with the matter told Reuters.

owever, prices are expected to remain tepid on the back of recovering hot metal output and Chinese Lunar New Year restocking, a Mysteel report released on January 26 said.

Iron ore stocks at steel mills are still lower than the same period in previous years, with the current rate of inventory increase expected to continue, the report added.

Meanwhile, BHP Group, the world’s No. 3 iron ore supplier, has shipped iron ore cargoes barred from sale in China to Malaysia and Vietnam, seeking alternative buyers as its stocks of Jimblebar pile up at Chinese ports amid a protracted contract dispute with Beijing.

Stocks of BHP’s Jimblebar fines at major Chinese ports were up 360% from late September to 8.1 million tons as of January 13, according to two separate traders.

Chinese steelmakers are not allowed to take delivery of JMBF cargoes already at ports, sources told Reuters.

Iron ore inventory at major Chinese ports rose 1.2% week-on-week, data released on January 23 from consultancy Steelhome showed.

Other steelmaking ingredients on the DCE were mixed, with coking coal and coke up 0.48% and down 0.26%, respectively.

Steel benchmarks on the Shanghai Futures Exchange firmed. Rebar rose 0.38%, hot-rolled coil gained 0.27%, wire rod hardened 0.89% and stainless steel increased 0.38%.