MANILA: Iron ore futures rose on Wednesday, with the Dalian benchmark contract rising more than 5percent after a three-session slump, as worries over supply boosted prices of the raw material.
The most-traded September iron ore on China’s Dalian Commodity Exchange rose as much as 5.4percent to 1,191.50 yuan ($186.33) a tonne.
July iron ore on the Singapore Exchange advanced 2.6percent to $205.90 a tonne, the highest since May 19.
Concerns over iron ore supply to top steel producer China also buoyed spot prices, with the benchmark 62percent material rising to $209 a tonne on Tuesday, the strongest since May 19, based on SteelHome consultancy data.
Iron ore inventory at Chinese ports dropped to 127.65 million tonnes last week, the lowest since February 5, while shipment arrivals were lower than prior-week and year-ago volumes, according to metals data provider SMM.
Shipments from top iron ore miner Rio Tinto were seen declining, while Brazil’s Vale SA has interrupted production at two mines over safety concerns, reducing its output by 40,000 tonnes a day.
“We should start seeing the impact of this week’s stoppage in next week’s export numbers,” said RBC Capital Markets mining analyst Kaan Peker in a note.
“We anticipate marginal weaker (month-on-month) imports from Brazil and Australia,” he said, adding that Indian volumes “had been impacted by wet weather”.
On the demand side, some analysts said the outlook for Chinese steel products remained bright, despite subdued May trade data.
“Solid global growth recovery in the coming quarters will likely boost final goods demand and hence the demand for Chinese exports,” J.P. Morgan analysts said in a note.
Construction steel rebar and hot-rolled coil on the Shanghai Futures Exchange both ended the morning trade up 2.6percent. Stainless steel gained 2.3percent. Dalian coking coal jumped 3.7 percent, while coke climbed 4.9percent.