China iron ore futures fall as Brazil supply prospects brighten

Dalian iron ore futures fell on Wednesday on rising shipments of the steelmaking ingredient from the world's top suppliers, including Brazil, and weakening demand in top steel producer China ahead of the Lunar New Year holiday.

Iron ore on China's Dalian Commodity Exchange dropped 1.7% to 940.50 yuan ($145.59) a tonne by 0330 GMT, after a 3.3% slump in the previous session.

On the Singapore Exchange, iron ore rose 0.5% to $145.05 a tonne, off a session high of $147.

Global iron ore supply had been tight since the 2019 tailings dam collapse at Vale SA's Corrego do Feijao mine in Brazil, which prompted mine closures there for safety checks.

That had added to the upward pressure on prices last year, which were pushed higher mainly by China's stimulus-driven demand for the raw material.

"Brazil is off to a good start in 2021 and we expect the country to regain some of the lost market shares this year," said Erik Hedborg, iron ore analyst at CRU in London.

Brazil's iron ore exports in January reached 29 million tonnes, compared with 26.7 million tonnes in the same month last year.

Brazil's supply looks set to improve further as Bahia Mineracao commenced production at a mine with expected 2021 output of 1 million tonnes.

Higher shipments from top producer Australia also helped improve the overall supply outlook, with exports from the Pilbara region rising 2% year-on-year last month.

Spot iron ore traded at $150 a tonne on Tuesday, the lowest since Dec. 9, SteelHome consultancy data showed.

Steel prices also remained under pressure as demand weakened ahead of a week-long Lunar New Year holiday beginning on Feb. 11 in China.

Rebar on the Shanghai Futures Exchange slipped 0.3%, hot-rolled coil lost 0.1%, and stainless steel slumped 1.7%.

Coking coal dipped 1% while coke dropped 1.6%.