China iron ore futures tick higher on supply deficit fears

reuters.com Iron Ore,  futures 2020-03-26 16:14:58

Chinese iron ore futures edged higher on March 26 on supply concerns as coronavirus containment measures across the world intensified, but clouded demand outlook for the steelmaking raw material and steel products capped gains.


The most-traded May iron ore contract on the Dalian Commodity Exchange ended the morning session up 0.2% at 658.50 yuan/t ($92.67/t). The front-month April contract on the Singapore Exchange, however, fell as much as 1.9%.


Supply concerns also supported spot prices. The benchmark 62% iron ore bound for China, the biggest buyer of the raw material and which accounts for more than half of the world's steel output, was well above $80/t.


"Prices (are) trading above $80/T level, comfortably supported by expectations of a potential supply deficit in 2020 as many major producing countries announce complete lockdowns," commodity strategists at ING wrote in a note.


"It is estimated that approximately 80 million tonnes of iron ore supply could be impacted due to border controls and lockdowns in countries."


Iron ore exporters Australia, India, Canada and South Africa have all imposed pandemic containment measures, while Brazilian iron ore miner Vale SA has suspended operations at its distribution facility in Malaysia.


Construction steel rebar on the Shanghai Futures Exchange was up 0.3%, while hot-rolled steel coil, used in cars and home appliances, fell 1.1%.


Stainless steel climbed 0.6%.


Coking coal gained 0.2%, but coke slipped 0.3%.


Spot 62% iron ore rose to $87/t on March 25, from March 24's $84.70/t, data showed.


Mainland China for a second consecutive day reported no new local coronavirus infections as the epicentre of the epidemic Hubei province opened its borders, but imported cases rose as Beijing ramped up controls to prevent a resurgence of infections.



(Writing by Tammy Yang  Editing by Alex Guo)
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