China's iron ore futures rose on Tuesday, rebounding from a three-session slump on worries over possible disruption in shipments of the steelmaking raw material from top supplier Australia, where the cyclone season has begun.
The Dalian Commodity Exchange's most-traded iron ore contract, with May expiry, ended 2.1% higher at 671.50 yuan ($97.60) a tonne. On the Singapore Exchange, the front-month February contract extended gains, rising 1.5% in afternoon trade.
"Investors are watching the supply risks surrounding cyclones in Australia," ANZ Research analysts said in a note. A severe tropical cyclone named Claudia was moving over open waters to the northwest of the Pilbara, Australia's key iron ore-producing region, according to the nation's weather bureau.
Claudia, though, was likely to start weakening later on Tuesday, it said. Supply-side concerns buoyed iron ore prices as inventory of the material at China's ports had fallen for two straight weeks to 127.90 million tonnes, as of Jan. 10, the lowest since mid-December last year, based on SteelHome consultancy data.
Port stocks shrank as steel mills continued to boost their stocks ahead of the Lunar New Year holidays later this month. The spot price of benchmark 62% iron-content ore for delivery to China was steady at $94.70 a tonne on Monday, SteelHome data showed.
China's iron ore imports rose 0.5% in 2019 to 1.069 billion tonnes, just below the 2017 record peak, on strong demand at steel mills and the recovery in shipments from big miners after disruptions earlier in the year. China's appetite for high-grade iron ore this winter looks set to drop from the peaks hit in recent years as steel mills try to cut costs and prop up profit margins weighed down by the nation's slowing economy, industry sources said.
China's steel futures also rebounded from recent losses, with the Shanghai Futures Exchange's most-traded construction steel rebar contract closing 0.6% higher after data showed the nation's exports and imports in December rose more than expected.
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