Iron ore futures surged above $121 on Wednesday on mounting supply concerns.
Australian defence personnel are being deployed to Port Hedland to help contain the coronavirus outbreak after 17 of the 21 crew members of a cargo ship were tested positive, reigniting concerns over supply disruptions.
Furthermore, exports from Brazil declined in the week to 27 Sep, with shipments from Vale SA running below the rate needed to meet the miner’s annual production guidance, according to UBS Group AG.
This came as Vale halted its operation at the Viga concentration plant following a court order, with an estimated loss of 11,000 mt/day, deemed insignificant by some market participants.
Meanwhile, some onshore players were forced to cover their short positions as many domestic brokers were heard to enforce margin calls. Congestion at Chinese ports and slower custom clearance were also reported, resulting in long queues at ports.
In the last trading session before the Golden Week holiday, Oct was seen trading up from 119.5 to above 120.0. Q1 also traded 106. After the close, iron ore gained further momentum, partly due to sellers covering for shorts, with Oct trading as high as 121.6.