MANILA: Dalian iron ore futures rose on Thursday as key supplier Australia began preparing for a potential tropical cyclone, while worries over rising coronavirus cases in China weighed on prices of the steelmaking raw material in Singapore.
The most-active May iron ore contract on China’s Dalian Commodity Exchange ended a volatile morning session 0.7% higher at 1,059 yuan ($163.93) a tonne.
Australia’s Pilbara Ports Authority has begun clearing large vessels from anchorages at Port Hedland, the world’s biggest iron ore loading hub, after the weather bureau said a Category 1 or 2 cyclone could make landfall on the Pilbara coast by Friday.
Iron ore’s front-month February contract on the Singapore Exchange fell 0.4% to $165.28 a tonne by 0350 GMT, extending losses into a third session.
“The market is concerned about the small outbreak of coronavirus cases in China, which could impact steelmaking facilities” if more lockdown measures are implemented, said Daniel Hynes, a senior commodity strategist at ANZ.
New COVID-19 cases in top steel producer China continued to rise despite a flurry of measures to contain the latest outbreak.
Seasonally weak steel demand and squeezed margins in China also weighed on iron ore, with the spot price dropping to $171.50 a tonne on Wednesday from $172 the day before, according to SteelHome consultancy data. “Although we acknowledge the supply risks in Australia, a demand slowdown ahead of the Chinese New Year could see prices normalising to $156/tonne by the end of this quarter,” Hynes said.
While possible disruptions in iron ore supply and mining operations loom in Australia, higher 2021 production guidance flagged earlier this week by top miners BHP and Rio Tinto helped improve the overall supply outlook.
Construction steel rebar on the Shanghai Futures Exchange rose 1.1%, while hot-rolled coil gained 0.1%. Stainless steel climbed 1%.
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