Iron ore futures in China rose for a sixth straight session on Thursday, posting their longest winning streak since mid-May, as strong domestic demand and heavy port congestion pushed spot prices higher.
The Dalian Commodity Exchange’s iron ore for January 2021 delivery closed up 0.9% at 857.50 yuan ($125.46) a tonne, well off the most-traded contract’s record high of 874 yuan hit early in the session.
On the Singapore Exchange, the front-month October contract jumped as much as 5.8% to $129 a tonne, rising for a fifth session in a row.
Spot prices of the steelmaking ingredient climbed back to $126.50 a tonne on Wednesday SH-CCN-IRNOR62, the highest since January 2014, based on SteelHome consultancy data.
Chinese steelmakers’ blast furnaces are operating at high utilisation rates, keeping iron ore demand strong, said Richard Lu, a senior analyst at CRU consultancy in Beijing.
Steel mills continued to ramp up output as data released this week pointed to a steady economic rebound in the world’s biggest steel producer and consumer and as signs of a recovery elsewhere provided some encouragement.
Heavy congestion at China’s ports amid strict coronavirus quarantine protocols has affected iron ore flows and further boosted prices, Lu said, although he now sees limited upside.
“We do not foresee iron ore prices to go above $130,” he said. “A meaningful pullback will occur either when port congestion mitigates or underlying steel demand drops.”
FUNDAMENTALS
* Brazilian miner Vale SA said it had failed to meet safety standard levels for three dams in Minas Gerais state, but it did not see any impact on iron ore production this year.
* Construction steel rebar on the Shanghai Futures Exchange rose 0.5%, but hot-rolled coil slipped 0.3%. Stainless steel slumped 2.3%.
* Coking coal climbed 1.5% and coke gained 2.2%.
Source:Reuters
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