SINGAPORE: Iron ore futures rallied for the third consecutive session on Friday as expanded restrictions on cargoes from mining giant BHP sparked concerns over supply that were compounded by expectations of rising hot metal output in China.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) climbed 3.22percent to 818.5 yuan (USD118.87) a metric ton, as of 0318 GMT.
The contract traded at a two-month high of 827 yuan earlier in the session.
The benchmark April iron ore on the Singapore Exchange was 0.7percent higher at USD108.6 a ton.
Both contracts have gained around 6.5percent so far this week. China has widened a ban on BHP iron ore for the second time in two weeks, escalating a months-long contract dispute with the world’s third-largest supplier of the key steelmaking ingredient.
China Mineral Resources Group (CMRG), the state-run iron ore buyer, informed domestic steel mills and traders on Thursday that starting late next week, they would be prohibited from taking delivery of Newman fines, a popular BHP iron ore stored at ports, three sources with knowledge of the matter told Reuters. Beijing has progressively tightened restrictions on local steel mills and traders buying BHP iron ore over the past six months as it negotiates the terms of BHP’s 2026 supply contract.
Traders were told last week to buy fewer new cargoes of Newman fines, Newman lumps and Mac fines, though the directive allowed for the purchase of those grades of iron ore already stored at ports.
This week’s ban narrows permitted buying exclusively to stocks of BHP’s Newman lumps and Mac fines already in port storage. Demand for feedstock is expected to rise, following the lifting of production cuts this week.
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