SINGAPORE: Iron ore futures declined on Friday, as traders unwound supply-disruption bets after Tropical Cyclone Narelle spared vital port infrastructure in Western Australia.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) traded 0.37percent lower at 813 yuan (USD117.60) a metric ton as of 0330 GMT.
Still, the contract has gained 0.13percent so far this week. The benchmark April iron ore on the Singapore Exchange was 0.32percent lower at USD107 a ton. It has lost 1percent so far this week. Iron ore futures are likely experiencing a temporary correction, as traders were relieved that tropical cyclone Narelle missed vital Western Australian port infrastructure, said Atilla Widnell, managing director of Navigate Commodities.
Even though the ports were shut, any damage to infrastructure could have resulted in prolonged supply disruptions. Still, bunker fuel supply and refueling options remain a primary concern for iron ore shippers as escalations in the Iran war continue to disrupt energy supplies, intensifying fuel rationing efforts and lifting shipping rates, Widnell added.
Iron ore futures were rangebound this week amid expectations of supply disruptions from Australia and potential steel mill production cuts tied to environmental protection measures. Higher market risk also curbed transaction volumes, per data compiled by LSEG.
Meanwhile, high iron ore inventories continued to pressure prices. Hot metal production rebounded this week, rising 15,000 metric tons week-n-week, indicating support for demand, a note from Shanghai Metals Market said.