Iron ore futures rose for a fifth straight session, with the benchmark Chinese index hitting its highest in five months, after data showed Brazil’s exports of the steelmaking raw material shrank in December.
Iron ore restocking ahead of the Lunar New Year holidays this month in China, which produces half of the world’s steel supply, also continued to support spot and futures prices.
The Dalian Commodity Exchange’s most-traded iron ore contract, with May expiry, ended 1.6 percent higher at 666 yuan ($95.53) a ton, after hitting 670.50 yuan earlier in the session, its highest since Aug. 6, 2019.
On the Singapore Exchange, the front-month February contract was up 0.5 percent at $92.30 a ton in afternoon trade.
Iron ore exports by Brazil, home to the world’s top producer Vale SA, dropped to 24.67 million tons in December from 27.25 million tons the month before and 33.20 million tons a year earlier, official data on Thursday showed.
Iron ore’s availability remains a key concern for the market after the commodity rallied last year to a five-year high, driven mainly by supply disruptions.
Last month, Vale flagged reduced output in the first quarter of 2020 as safety checks involving its mining facilities continued following a tailings dam disaster in January last year.
The light trading volumes, however, suggest that the price gains were mainly sentiment-driven, a Shanghai-based trader said.
“We don’t see very strong demand for iron ore these days, but there’s good news that lifted market sentiment,” the trader said, referring to the latest monetary policy-easing move by China’s central bank.
The People’s Bank of China announced on Wednesday a reduction in the amount of cash that all banks must hold as reserves, freeing up more funds to shore up a slowing economy. – Reuters