Iron ore futures extended gains for a third
day to reach the highest since January as investors weigh strong
domestic demand in China and supply worries from Brazil.
The recovery in the production from steel mills in China is
boosting sentiment, while iron ore port stockpiles declined to
the lowest in more than three years as economic activity
resumes.
Brazil, the world’s second-largest iron ore exporter after
Australia, is now the world’s fastest-growing coronavirus
hotspot, accounting for 13% of all new cases globally in the
past week. Miner Vale SA cut its annual shipment guidance
earlier on bad weather and the pandemic’s impact on operations.
The virus outbreak in Brazil’s Para state is “of particular
concern” to commodity markets if the number of infections
continue to rise and lockdowns are implemented, UBS Group AG
said in a report last week.Brazil shipped 1 million tons per day
of iron ore and its concentrated products in first 10 business
days of May.Vale has resumed its operations in a terminal
located in Malaysia, which had been halted since March 24, and
announced it will extend its suppliers aid program until May
31.Iron ore stockpiles at China’s ports dropped 0.9 million tons
to 111 million tons last week, according to Mysteel Global data
compiled by Bloomberg.China’s steel imports may rise
significantly to meet domestic consumption, while exports are
expected to drop, said Wu Jing Jing, deputy director at the
China Iron and Steel Association.Japan’s steel orders fell 8.4%
in March from a year earlier, according to data from Japan Iron
and Steel Federation.Thyssenkrupp is considering the sale of
units that make steel and submarines, in the latest plank in
management’s strategy to downsize the firm and concentrate on
higher-margin business areas.
Prices
Iron ore in Singapore +0.6% to $94.25/ton at 10:35am local time,
heading for the the highest close since JanuaryIron ore +0.7% to
696.5 yuan/ton on the Dalian Commodity ExchangeRebar +0.9% to
3,561 yuan/ton on the Shanghai Futures ExchangeHot-rolled coil
+0.8% to 3,468 yuan/ton on SHFE
“The rapid recovery of infrastructure construction in China and
the support from stimulus policy have raised the domestic
consumption of building materials to a higher level than year-
earlier period,” Huatai Futures said in a note. “There’s still
room for iron ore to rebound consistently.”
Bloomberg