Iron ore falls as China allows purchases of banned BHP portside cargo

SINGAPORE: Iron ore futures fell on Tuesday after two consecutive sessions of gains, as supply concerns eased after news that China’s state buyer had allowed some local steelmakers to purchase previously banned BHP cargoes piling up at ports.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) was down 1.33% at 777 yuan ($113.78) a metric ton, as of 0328 GMT.

The benchmark May iron ore on the Singapore Exchange was 0.82% lower at $106 a ton.

The China Mineral Resources Group’s (CMRG) decision came after BHP Group said last week it had concluded a contract negotiation with the state-backed iron ore buyer, ending a months-long dispute.

Bloomberg reported that Fortescue was also close to concluding its own supply deal with CMRG.

Meanwhile, Iran, one of the world’s top 10 steel producers, has banned exports, raising expectation for a pickup in demand for Chinese finished steel products.

Iran has banned exports of steel slabs and sheets until May 30, state media reported on Monday, as the local steel industry has been targeted in strikes during the conflict with Israel and the United States.

Around 10 million tons of Iran’s annual steel production capacity, or 25% to 30% of total output, was knocked offline following damage to key facilities, the newspaper Etemad had reported on Sunday.

Other steelmaking ingredients on the DCE declined, with coking coal and coke down 1.37% and 2.46%, respectively.

Most steel benchmarks on the Shanghai Futures Exchange retreated.

Rebar lost 0.88%, hot-rolled coil fell 1.03%, wire rod lost 0.43%, while stainless steel strengthened 1.53%.