Iron ore futures advanced on Tuesday on renewed optimism over a swift economic recovery in China and hopes for further demand after the rainy season.
The world’s biggest steel producer brought in 101.68 million tonnes of iron ore last month, surging from 87.03 million tonnes in May, data from the General Administration of Customs showed. Imports were also up 35% from June 2019.
The robust June trade data offered hope that China is in the midst of a V-shaped economic recovery from the pandemic. At the same time, iron ore supplies have struggled to match booming demand from the steel industry, Despite Australia churning out record volumes.
“June is the last month of the Australian financial year and miners were motivated to ship out more material for decent financial results,” said Zhao Yu, analyst with Huatai Futures, adding that steel mills were also buying up on hopes of more demand after the rainy season.
The recent surge in iron ore has been driven by “market sentiment and in preparation for the peak season”, analysts at Huatai Futures wrote in a note, adding that current utilization rates at blast furnaces remained at high levels.
This came on the backdrop of growing tensions between the two nations.
Australia’s shipments of iron ore to China from the world’s top export hub of Port Hedland climbed to a record of 46.2 million tonnes in June, data from the port authority showed on July 10.
Analysts said that demand for Australia iron ore would remain robust until mid-2021 due to supply shortages from Brazil, low Chinese iron ore inventories as well as stronger-than-expected steel production.
Futures in Singapore were once again firmer today, with Aug trading above 109.0. Aug kicked off the day trading as low as 108.25, and Sep at 105.1 but since recovered and marched on as the morning progressed. Aug and Sep were seen trading as high as 109.3 and 105.95.