Iron ore price extends gains as Chinese steel mills restock

Dalian iron ore futures extended gains on Tuesday, as Chinese steel mills procured feedstock ahead of the May Day holiday and fuel shortages in major exporters Australia and Brazil raised concerns about supply disruptions.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) rose 0.64% to 784 yuan ($115.05) a metric ton.

The benchmark May iron ore on the Singapore Exchange was flat at $106.95 a ton, as of 07:26 GMT.

Steel mills in China are restocking ahead of the May 1-5 holiday, providing support to prices, Australian bank ANZ said in a note.

The lender also said there were concerns around iron ore supply due to fuel shortages impacting mining in Australia and Brazil.

Volumes of iron ore arriving at Chinese ports declined last week by 20% week-on-week, driven by lower exports of Brazilian ore, as monsoon rains affected mining operations, Shanghai Metals Market said in a note.

The Middle East conflict has also resulted in a reduction of Iran’s steel exports, potentially leading to more appetite for Chinese steel, Chinese broker Everbright Futures said.

In company news, Rio Tinto reported a 2.4% rise in first-quarter iron ore sales, driven by robust production at its Pilbara operations.

The world’s biggest iron ore producer sold 72.4 million metric tons of iron ore from its Pilbara operations in the three months ended March 31, compared with shipments of 70.7 million tons a year earlier.

Other steelmaking ingredients on the DCE gained ground, with coking coal and coke up 1.53% and 2.42%, respectively.

Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar gained 0.76% and hot-rolled coil rose 0.72%, while wire rod eased 0.09% and stainless steel shed 1%.

($1 = 6.8145 yuan)

(By Ruth Chai; Editing by Subhranshu Sahu)