Dalian iron ore jumps nearly 9% on strong demand bets, supply worries

MANILA: Dalian iron ore futures jumped nearly 9% on Monday as the key steelmaking raw material extended a rally powered by bullish demand outlook for 2021 and growing concerns about supply.

Iron ore has emerged as this year's top-performing major commodity globally, having gained more than 140% this year, which some analysts and traders have also attributed to huge speculative bets.

The most-traded iron ore for May delivery on China's Dalian Commodity Exchange jumped as much as 8.8% to a contract high of 1,135 yuan ($173.69) a tonne, after a landslide at a mine operated by iron ore giant Vale SA added to supply worries.

Iron ore on the Singapore Exchange climbed 5% to $170.26 a tonne, crossing the $170 mark for the first time ever.

Steel commodities on the Shanghai Futures Exchange and other Dalian steelmaking raw materials also climbed to contract highs.

Top steelmaker China is expected to produce 1.065 billion tonnes of crude steel in 2021, up 1.4% from a 1.05 billion tonne forecast for this year, a government consultancy said.

"The market has optimistic expectations for next spring demand," analysts at Sinosteel Futures in Beijing said in a note.

Iron ore has been propped up not just by fundamental factors but also by "a large amount of risky funds for gaming", they said.

Spot iron ore also surged, with SteelHome consultancy's data showing the benchmark 62% material at $164.50 a tonne on Friday, the highest on record.

Shanghai rebar rose 4.8%, while hot-rolled coil advanced 5%. Stainless steel added 1.3%.

Dalian coking coal jumped 7.9% and coke climbed 7.4%.

Coal producers in key supplier Australia may have to start cutting output if China maintains limits on imports from them.