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Dalian iron ore hits 3-week high, slow offers of seaborne cargoes

Chinese iron ore futures rose to a three-week peak on Tuesday, supported by shrinking inventory of the commodity at the country’s ports amid slow offers of fresh cargoes.

“There hasn’t been a lot of offers of seaborne cargo recently, hence the continuous drop in port stocks,” said a Shanghai-based iron ore trader.

“The trend is likely to continue in the short term, but I believe the supply will resume to high levels in coming months.”

Some shipments from top iron ore supplier Australia have been disrupted by rainy weather, traders said. Still, Goldman Sachs said last week that the recent increase in freight rates on the main routes to China could indicate improvement in availability of spot material in coming weeks.

Inventory of imported iron ore at 44 Chinese ports dropped 1.3 million tones to 85.4 million tonnes as of May 29, the lowest since December 2013, according to consultancy SteelHome.

The stocks have fallen for seven straight weeks and were down 16 percent this year as of the end of last month.

The most-traded iron ore contract for September delivery on the Dalian Commodity Exchange closed up 1.2 percent at 441.50 yuan ($71) a tonne, after hitting a session high of 445.50 yuan.

The sustained drop in port stocks helped fuel a recovery in spot iron ore prices to above $60 a tonne from a decade-low of $46.70 in early April.

The spot benchmark last stood at $61.40 a tonne on Friday, based on data compiled by The Steel Index. A price assessment was not released on Monday due to a public holiday in Singapore.

There are only few offers of fresh cargo on tender on Tuesday. Brazil’s Vale is selling a 41,081-tonne cargo of 64.29-percent grade iron ore fines via a tender, according to a trader who has seen the offer.

Rebar steel on the Shanghai Futures Exchange rose 0.4 percent to end at 2,375 yuan a tonne, after touching a two-week high of 2,386 yuan on Monday.
Source: Reuters