Iron ore futures rebounded from losses amid cyclone concerns over possible disruptions to Australian iron ore shipments and productions.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) then rose slightly by 0.24% on-day or RMB 2.50 to RMB 1,059/mt on Wednesday.
The steel rebar contract on the Shanghai Futures Exchange however, dropped slightly by 0.44% or RMB 19 day on-day to RMB 4,310/mt.
Development of Cyclone Lucas near Port Hedland
Market participants were concerned about the development of Cyclone Lucas off the western Australia coast, threatening iron ore terminal of Port Hedland and with the possibility of moving inland along the Pilbara coastal region.
However, the Australia’s Bureau of Meteorology (BOM) predicted that Cyclone Lucas might move further north instead and avoid Port Hedland in its path and formed into either a Category 1 or 2 tropical cyclone by then.
The BOM also stated that the La Nina weather pattern may have peaked, though heavy rains may persist at the affected areas.
Rio Tinto and BHP maintain high annual guidance for 2021
Despite the cyclone concerns, both Rio Tinto and BHP are optimistic about the Chinese steel demand for 2021, which were reflected in their annual guidance.
For instance, Rio Tinto had lifted its annual guidance to ship between 325 and 340 million mt for 2021, after shipping a total of 330.6 million mt of iron ores in 2020, with the targeted annual guidance of 324-334 million mt.
Meanwhile, BHP’s annual guidance was unchanged and maintained at 276-286 million mt of iron ore shipment for the financial year of 2021.
So far, the major miner had shipped 144.1 million mt of iron ore cargoes to China over the past six months ending in Dec 2020, accounting nearly half or 49.7% of its annual iron ore shipment target at around 290 million mt per year with another six-month timeframe to spare.