Iron ore futures in China and Singapore rose on Tuesday after miner Fortescue Metals Group raised concerns over a labour shortage in Australia because of COVID-19 curbs, which could hamper output and shipments of the steelmaking ingredient.
Bigger rivals BHP Group and Rio Tinto have also warned of disruptions from labour shortages as Australia faces a surge of Omicron coronavirus variant cases.
Iron ore’s most-traded May contract on China’s Dalian Commodity Exchange ended daytime trading 1.4% higher at 766.50 yuan ($121.14) a tonne, rising for a fifth straight day after overnight gains erased Monday’s daytime losses.
On the Singapore Exchange, the most-active March contract was up 2.5% at $136.20 a tonne by 0704 GMT.
Fortescue, the world’s fourth-biggest iron ore miner, posted a 2% rise in second-quarter shipments, but flagged pressures from strong demand for labour and resources, as well as supply chain constraints due to the pandemic.
“The release of Fortescue’s production report should shed light on whether recent iron ore supply disruptions have been overcome,” ANZ commodity strategists said in a note.
Analysts said supply concerns may boost support for iron ore, which has rebounded this month amid top steel producer China’s stepped-up monetary easing efforts to shore up its slowing economy.
But for now, traders’ optimism is likely to be tempered ahead of the Chinese Spring Festival holidays from Jan. 31 to Feb. 6, and with operations at steel mills expected to remain curtailed throughout February to improve air quality during the Beijing Winter Olympic Games.
Construction steel rebar on the Shanghai Futures Exchange SRBcv1 gained 0.2%, while hot-rolled coil climbed 0.6%.
Shanghai stainless steel tumbled 6.2%, tracking a pullback in prices of key ingredient nickel, and after the exchange announced adjustments in transaction fees and margin requirements for nickel, tin and stainless steel.
Dalian coking coal shed 0.7%, but coke advanced 1.2%.