Iron ore futures extended gains on Wednesday, with the Singapore benchmark contract vaulting past $120 a tonne to hit a fresh six-month peak, as concerns over supply added support to prices already boosted by brightening demand prospects in China.
Analysts said latest data showing lower iron ore shipment volumes particularly from Brazil and plunging cargo arrivals in top steel producer China were also driving prices of the steelmaking ingredient higher.
Iron ore’s most-active May contract on China’s Dalian Commodity Exchange ended daytime trade 1.6% higher at 847.50 yuan ($125.14) a tonne.
On the Singapore Exchange, benchmark February iron ore was up 1.1% at $121.30 a tonne, as of 0700 GMT.
“(Brazilian miner) Vale’s shipments have dropped significantly due to the impact of the rainy season,” Sinosteel Futures analysts said in a note.
Vale SA, one of the world’s largest iron ore producers, said last month it expected 2023 output to reach between 310 million and 320 million tonnes, flat compared with last year’s output forecast.
Global iron ore shipments in the first quarter are projected to decline also because of mine maintenance programmes and weather-related disruptions, analysts said.
Miner Ferrexpo, meanwhile, said its annual production of iron ore pellets slumped due to higher costs, logistical constraints and disruptions caused by the Russian invasion of Ukraine.
Most steel benchmarks on the Shanghai Futures Exchange and other Dalian steelmaking inputs also rose, with coking coal and coke up 2.3% and 3.6%, respectively.
Rebar climbed 1.3%, hot-rolled coil gained 0.9%, and wire rod added 0.3%. But stainless steel fell 1.3%.
Dalian iron ore has risen more than 40% from a low in November, while SGX prices are up more than 3% this month, propped up by China’s easing of pandemic controls and policy support for its economy.