(Reuters) – China’s iron ore futures advanced for a third straight session to a one-week high on Tuesday, as concerns over tight supply pushed spot prices of the steelmaking raw material further above $160 a tonne.
The most-traded iron ore for May delivery on the Dalian Commodity Exchange rose as much as 4.5% to 1,043.50 yuan ($162.24) a tonne, its strongest since Dec. 29.
Iron ore’s most-active February contract on the Singapore Exchange was little changed at $161.26 a tonne by 0336 GMT.
Fresh signs of continuing tightness in iron ore supply and an overall positive sentiment after the New Year holidays pushed spot prices in China to $166 a tonne on Monday, the highest since Dec. 24, according to SteelHome consultancy.
After a two-week rise, iron ore volumes dispatched from 19 ports and 16 mining companies in Australia and Brazil – the biggest suppliers to top steel producer China – declined over Dec 28-Jan 3 by over 1 million tonnes, or 4.3%, from the week before, Mysteel consultancy reported.
At the same time, portside iron ore inventory in China shrank to 126.75 million tonnes as of Dec. 31, down 4.1% from last year’s peak of 132.15 million tonnes recorded on Nov. 13, SteelHome data showed.
“Despite well-balanced iron ore market fundamentals, iron ore prices have reacted to relatively lower weekly shipments out of Australia and Brazil,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.
Additional support emanated from the U.S. dollar depreciation and an indication of the beginning of China’s seasonal steel restocking cycle over the past few days, he said.
FUNDAMENTALS
- Construction steel rebar on the Shanghai Futures Exchange rose 0.6%, while hot-rolled coil gained 0.2% and stainless steel jumped 2.2%.
- Dalian coking coal climbed 1.7% while coke rose 2.3%, extending gains also due to tight supply.
