Iron ore futures closed the week on higher notes due to robust steel production as well as concerns over shipping disruptions from Typhoon Bavi.
The most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange then rose by 1.40% or RMB 11.50 day-on-day to RMB 832.50 per tonne on Friday.
Then, the steel rebar contract on the Shanghai Futures Exchange followed the rally and gained slightly by 0.24% or RMB 9 day-on-day to RMB 3,734 per tonne.
Possible shipping disruption from Typhoon Bavi
China’s port inventory continued to grow this week at 113.1 million mt, up 687,600 mt from previous week, according to Mysteel’s data.
However, some trade participants were concerned that the Typhoon Bavi might cause shipping disruption in the East Asia, after it swept through South Korea, North Korea and headed toward China’s northeastern region.
Any potential disruption will worsen the port congestion situation among Chinese ports, where the long vessel queues and strict custom clearance extended cargo arrival time.
Fundamentals remain the same
Despite the higher weekly port inventory volume, the iron ore prices continued to draw support from supply tightness of medium grade fines among port stocks.
Thus, some trade sources expect stronger buying interest for Australian fines in September in view of limited supply of mainstream Australian fines among docksides.
Besides, there was also strong interests for Brazilian fines as many mills increase their usage of high-grade fines to blend with low grade ores. Their demand was supported by stable supply of Brazilian fines with over 9 million mt of Brazilian shipment seen last week.