China iron ore futures approach record-high on supply worries

[MANILA] Iron ore futures in China surged more than 6 per cent in early trade on Tuesday amid strong demand and lingering concerns about supply, while steel prices rose for the first time in six sessions.

The most active September iron ore contract on the Dalian Commodity Exchange jumped 6.3 per cent to as high as 899.5 yuan (S$177.84) a tonne, moving closer to a record-peak of 911.5 yuan hit on July 3.

Credit ratings agency Standard & Poor's has raised its iron ore price forecasts for 2019, 2020 and 2021, saying it expects a prolonged hit to supply stemming from a deadly tailings dam collapse in Brazil in January.

FUNDAMENTALS

- The most-active October construction steel rebar contract on the Shanghai Futures Exchange rose as much as 2.1 per cent to 4,085 yuan a tonne.

- Hot-rolled coil, steel used in cars and home appliances, climbed as much as 2.6 per cent to 3,965 yuan a tonne.

- China's top steelmaking province of Hebei has moved up the target dates for cutting industrial capacity and relocating plants by two months to the end of October, the provincial environmental department has said.

- Spot iron ore for delivery to China, with 62 per cent fines, was steady at US$117.50 a tonne on Monday, near a more than five-year high of US$126.50 hit on July 3, according to data tracked by SteelHome consultancy.

- Iron ore stocked at China's ports rose for the first time in three months to 115.6 million tonnes as of July 5, the latest weekly SteelHome data showed. Port inventory had fallen steadily since April to 115.25 million tonnes as of June 28, the lowest since early 2017.

- Other steelmaking materials were firmer, with Dalian coking coal up as much as 1.4 per cent at 1,391 yuan a tonne, while coke gained 1.1 per cent to 2,152.50 yuan.

REUTERS