MANILA: Dalian iron ore futures ticked higher in early trade on Thursday, extending their rally into a fifth session, as declining shipments from Brazil and Australia amid higher demand from China indicated tight supply of the steelmaking raw material.
The most traded May 2019 iron ore contract on the Dalian Commodity Exchange was up 0.2 percent at 681.5 yuan ($101.53) a tonne by 0233 GMT, after rising as much as 1.4 percent shortly after the market opened.
The contract gained 11.5 percent in the last four sessions, in an intense rally that brought it to record levels this week.
Spot iron ore supplies in China are expected to tighten further amid reduced shipments from Brazil and Australia and improving demand from steel mills, said commodity broker Marex Spectron.
Spot iron ore for delivery to China <SH-CCN-IRNOR62>, with 62 percent fines, rose 1.7 percent to $91.50 a tonne on Wednesday, according to SteelHome consultancy.
The sharp decline in iron ore arrivals into China in recent weeks was "more significant" than what was seen earlier this year when cyclone Riley hit ports operations in Australia, Marex Spectron said in a note.
Brazil's iron ore exports in March totalled 22.18 million tonnes, 23 percent lower than February and 26 percent down from a year ago, following a fatal tailings dam disaster in January at a mine operated by Vale SA.
Iron ore shipments from Brazil and Australia in the first quarter were 7-8 percent lower than year-ago volumes, and were down by double-digit rates from the previous quarter, said analyst Helen Lau of Argonaut Securities.
The price rally has been supported by "solid" steel demand, she said.
"Blast furnace utilization rates in (steelmaking) Hebei province in April are expected to increase as there is less pressure for environmental protection," Lau said.
Vale, the world's biggest iron ore supplier, has said its sales this year could be up to 75 million tonnes less than initially forecast, after several mines were halted following the disaster.
Weather-related supply disruptions from Australia further reduced exports to China, with major iron ore producers BHP Group Ltd, Rio Tinto and Fortescue cutting their output or shipments estimates after cyclone Veronica hit operations towards the end of March.
Restocking of iron ore by Chinese steel mills remains lacklustre, according to Marex Spectron, though it expects such weakness to be "transitory as margins rise and mills typically step up production during this time of the year."
The most-active construction steel rebar contract on the Shanghai Futures Exchange was nearly flat at 3,572 yuan a tonne, compared with Wednesday's close of 3,573 yuan.
Hot rolled coil, used in cars and home appliances, edged up 0.4 percent to 3,813 yuan.
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