中文
China's iron ore futures extended gains into a third straight session on February 13 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% to 626.50 yuan/t ($89.78/t) in early trade, its highest since January 23.
On the Singapore Exchange, the front-month March contract for the steelmaking raw material gained 0.4% to $86.16/t.
Despite weak demand for iron ore in the physical market, spot prices scaled a fresh three-week high on February 12, with the benchmark 62% grade climbing to $87/t, data showed.
That translates to a 4.8% gain so far for this week, after prices dipped to their lowest in nearly three months last week.
On February 12, 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 tonnes)," commodity strategists at ANZ wrote in a note, while also citing a decline in output from Australia.
Costlier raw materials and declining steel prices in China, where the coronavirus epidemic has disrupted economic activity, may squeeze steel mills' profit margins.
"The signs of softer demand for iron ore should limit the upside," ANZ strategists said.
Amid weak downstream demand, the inventory of construction steel rebar in China has piled up to the highest since April 2019, data showed.
(Writing by Emma Yang Editing by Jessie Jia)
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