China’s iron ore futures extended gains into a third straight session on Thursday as concerns over supply cuts from Brazil and Australia drove spot prices of the bulk commodity higher, but worries over the coronavirus epidemic capped gains.
The Dalian Commodity Exchange’s most-traded iron ore contract, with May expiry, rose as much as 2 percent to 626.50 yuan ($89.78) a ton in early trade, its highest since Jan. 23.
On the Singapore Exchange, the front-month March contract for the steelmaking raw material gained 0.4 percent to $86.16 a ton.
Despite weak demand for iron ore in the physical market, spot prices scaled a fresh three-week high on Wednesday, with the benchmark 62 percent grade climbing to $87 a ton, SteelHome consultancy data showed.
That translates to a 4.8 percent gain so far for this week, after prices dipped to their lowest in nearly three months last week.
On Wednesday, Brazilian miner Vale SA reported that the volume of rainfall recorded in Minas Gerais, the country’s iron ore-producing region, was higher than the historical average.
“Heavy rain in Brazil has forced Vale to cut its first- quarter guidance on output by 5mt (million tons),” commodity strategists at ANZ wrote in a note, while also citing a decline in output from Australia. — Reuters