Iron ore futures rebounded from previous losses on tightening supplies concerns, amid healthy margins and better steel prices.
The futures of Dalian Commodity Exchange (DCE) for January delivery then rose by 2.77% day-on-day or up RMB 19.50 to RMB 723.50/mt, during the day trading session on Tuesday.
The rebar futures, however, went up slightly by 2% day-on-day or up RMB 90 to RMB 4,589/mt, during the day trading session.
Supply tightness concerns over suppliers
There was growing market concerns over tightening supplies, as Brazil’s Vale suspended mining operation in its Southeastern and Southern iron ore systems due to heavy rains.
However, the major miner maintained its iron ore production guidance of 320-335 million mt unchanged for 2022, according to Vale’s official corporate releases, and stated that the miner will resume production later upon favorable weather to fill up the output gap.
Other Brazilian integrated miners like CSN had also suspended the iron ore loading operation at Itaguai port, due to rainy weather and it expected to resume operation only on favorable weather.
Falling Australian and Brazilian shipments to support prices
Iron ore shipments had dropped among Australian and Brazilian suppliers during the Jan 3-9 period, after three consecutive weeks of gains, according to Mysteel’s survey.
The steel consultancy firm recorded 22.4 million mt of iron ore shipments in early Jan, down 20% on-week or a drop of 5.6 million mt to a new low since Nov 12.
The lower shipments had lent supports to upward price movement of iron ore futures, due to market concerns over supply tightness from Australian and Brazilian miners from adverse weather conditions.