Iron ore range-bound as BHP concludes supply negotiations with China

BEIJING: Iron ore prices were range-bound on Wednesday, with prospects of rising supply following the resolution of a months-long contract dispute between BHP Group and China countering a flurry of pre-holiday restocking by steelmakers.

BHP, the world’s third-largest iron ore supplier, said it had concluded iron ore sales contract negotiations with the China Mineral Resources Group (CMRG), the state iron ore buyer.

Reuters reported last week that CMRG had lifted bans on procurement of the key steelmaking ingredient from BHP after a visit by the miner’s top executives. The most-traded iron ore contract on China’s Dalian Commodity Exchange (DCE) was up 0.38percent at 787 yuan (USD115.37) a metric ton, as of 0214 GMT.

The benchmark May iron ore on the Singapore Exchange was 0.14percent lower at USD106.75 a ton, as of 0204 GMT. “As the term contract negotiation (between BHP and CMRG) has finalised, bearish factors have largely been priced in,” analysts at broker Yongan Futures said in a note. “Near-term demand is robust in the run-up to the holiday break, supporting prices, so prices will consolidate in the short run.”

Chinese steelmakers typically restock feedstock ahead of the May Day holiday over May 1-5. BHP said it expected seaborne iron ore demand to plateau at the current level over the next few years, with slight reduction in China offset by growth in emerging economies and recovery in Europe.

Coking coal and coke, other steelmaking ingredients, gained 1.23percent and 1percent, respectively. Steel benchmarks on the Shanghai Futures Exchange moved sideways. Rebar added 0.16percent, hot-rolled coil advanced 0.3percent and wire rod nudged up 0.03percent, while stainless steel lost 0.33percent.