Dalian iron ore breaches 1,000 yuan/T on demand view, supply fears

MANILA: Dalian iron ore breached the 1,000-yuan mark on Wednesday on optimism over demand for the steelmaking raw material and as traders fretted about supply in top steel producer China due to some disruptions in Australia.

The most-traded May iron ore contract on China's Dalian Commodity Exchange climbed 2.5% to 1,003 yuan ($153.32) a tonne by 0251 GMT.

Iron ore on the Singapore Exchange rose 0.3% to $153.74 a tonne.

"From the fundamentals perspective, steel margins are still good, at least for industrial materials including hot-rolled coil," said Richard Lu, senior analyst at CRU Group in Beijing.

"That's why the Chinese hot metal production is elevated, despite a marginal fall in recent weeks due to mill maintenance and stricter operating restrictions in some regions," he said.

Iron ore arrivals to China are expected to slow down, Lu added, citing some disruptions in Australia.

Mysteel consultancy's latest survey showed iron ore dispatched from Australia and Brazil fell for the second week over Dec. 7-13 by another 1 million tonnes from the prior week.

However, Lu said the market bulls and bears are expected to slug it out at about the 1,000-yuan mark, which was breached on Friday for the first time ever due to what some analysts had described as strong speculative interest in iron ore.

China's steel producers have called for a regulatory probe into the skyrocketing prices and a crackdown on any wrongdoing.