Chinese futures hiked to slight gain on Wednesday, as the iron ore rally slowed after six consecutive days of positive run.
The most-actively traded iron ore futures on the Dalian Commodity Exchange (DCE), for September delivery, went up slightly by 0.93% day-on-day to RMB 704.50 per tonne on Wednesday.
On the contrary, the steel rebar contract on the Shanghai Futures Exchange decreased slightly by 0.73% day-on-day to RMB 3,531 per tonne.
Brazilian woe to affect iron ore supply
Brazilian iron ore supply had been erratic since the start of the year, first by heavy rains that affected production and shipment.
Just well the weather conditions turned for a better, then the country was stricken with high number of coronavirus cases that tallied around 272,000 cases.
Therefore, Shanghai Metals Market predicted a weekly drop of 560,000 tonne for its May 10-16 shipments and a tight supply of high-grade ores ahead.
More supply outrages amid high Chinese steel demand
Commerzbank expects more iron ore supply outage ahead in view of rising COVID-19 cases in the South America, especially in Brazil.
To contain the pandemic, the country’s authority may enforce stricter lockdown measures that affect output and shipping activities.
After that, the Australian bank predicted an iron ore price uptick due to tightening supply of high-grade ores, while China’s steel demand moved to full swing with gradual resumption of industrial activities.
For instance, China’s steel production in April hiked by 7.7% month on month to 85 million mt, with an increase on a per day basis of 11.2%, and this momentum is expected to carry over to May.