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Markets

Asia's iron ore futures rise for third day on demand pickup, supply worries

  • However, Lee said any price upside for iron ore appears limited for now.
Published March 25, 2021
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Benchmark iron ore futures rose for a third straight session on Thursday, as spot prices in China stabilised after a recent sell-off following improved demand and easing worries about production cuts in the country's steelmaking hub.

Market participants also eyed developments that could fuel concerns about tight global supply of the steelmaking ingredient, such as the flooding in top exporter Australia and the Suez Canal blockage, analysts said.

Iron ore on China's Dalian Commodity Exchange ended the morning trade 3.4% higher at 1,074.50 yuan ($164.50) a tonne. It edged up 0.1% at $155.85 a tonne on the Singapore Exchange.

Spot iron ore prices were broadly stable on Wednesday, after Monday's sell-off triggered by worries about output curbs in China amid a clampdown on the industry's heavy polluters.

"Floods in Australia could tighten the availability of iron ore," commodity strategists at ANZ said in a note.

Australia has been hit by devastating floods caused by the worst downpour in more than half a century.

The Suez Canal blockage, meanwhile, caused "fears of supply-chain disruption, particularly on the raw commodities front", said Howie Lee, an economist at OCBC Bank in Singapore.

Low tide has slowed efforts to dislodge a 400-metre long, 224,000-tonne container vessel that has choked traffic in both directions along the Suez Canal and created the world's largest shipping jam.

However, Lee said any price upside for iron ore appears limited for now.

"China's demand is still the key driver from here, and we need to see stronger import numbers and crude steel production for iron ore to continue its rally," he said.

Rebar on the Shanghai Futures Exchange rose 1.5%, while hot-rolled coil advanced 0.9%. Stainless steel gained 1.2%.

Dalian coking coal and coke both jumped 2%.

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