BEIJING: Iron ore futures climbed for a sixth straight session on Tuesday, driven by growing worries on supply prospects from the giant Simandou project in Guinea, coupled with the anticipation of improving demand in top consumer China.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) climbed 2.53% to 809 yuan ($113.57) a metric ton, as of 0330 GMT.
It touched the highest level since July 25 at 814 yuan earlier in the session.
The benchmark October iron ore on the Singapore Exchange was 1.59% higher at $107.1 a ton, as of 0320 GMT.
The contract hit the highest level since February 25 at $107.65 earlier.
Miner Rio Tito could be forced to build refiners for the Simandou ore in Guinea, Australia’s Financial Review reported on Sunday.
The Simandou iron ore project, with an annual production capacity of 120 million metric tons, is expected first ore shipment in November, and put more pressure on ore prices in the coming years.
But the intention of Guinea government to process ore locally may reduce the availability of ore being exported, supporting prices, said one analyst and one trader.
Additionally, the market is also focusing on the pace of production resumption in the peak season and the corresponding restocking needs for raw materials, analysts at broker Shengda Futures said.
Steel mills, which had curbed production for a military parade in Beijing on September 3 to commemorate the end of World War Two, have gradually resumed production from September 4.
Hot metal output was expected to pick up to a relatively high level this week, supporting ore demand, analysts at Jinrui Futures said.
Shrinking margins and the accumulated steel stocks may suppress mill’s buying appetite, said Shengda analysts.
Coking coal and coke, other steelmaking ingredients, rose 0.35% and 0.43%, respectively.
Steel benchmarks on the Shanghai Futures Exchange advanced.
Rebar added 0.67%, hot-rolled coil climbed 0.84%, wire rod ticked up 0.3% and stainless steel gained 0.54%.
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