Spot iron ore prices edged higher, supported by firm Chinese demand for high-grade cargoes that has cut stockpiles of the raw material at the country’s ports to the lowest since February. Some sellers may be holding cargoes of iron ore, waiting for further price gains, before unloading them on to the market, traders said.
“We’re hearing there’s some shortage of high-grade cargo. That’s why port stocks are going down every week,” said an iron ore trader in Shanghai. “But we think this will be short-lived.”
Chinese steel mills were buying iron ore from stocks lying at the ports, given the limited availability of spot material with iron content of 60 percent or more, he said.
Inventory of imported iron ore at China’s major ports stood at 96.85 million tonnes at the end of last week, the lowest since mid-February. SH-TOT-IRONINV
Iron ore for immediate delivery to China’s Tianjin port climbed 1.1 percent to $56.80 a tonne on Monday, according to The Steel Index, which said some traders stopped offering cargoes in anticipation of further price increases. The benchmark has rebounded more than 20 percent since hitting $46.70 in April, the lowest level in a decade.
On Tuesday, iron ore for September delivery on the Dalian Commodity Exchange rose 2.2 percent to 428.50 yuan ($69) a tonne, following on Monday’s 3 percent jump and offering more support for spot prices.
To sustain the price rally, the market needs to see the closure of substantial amounts of high-cost production, said SP Angel analyst John Meyer. “We reckon the market needs to see the closure of around 200 million tonnes of existing production,” he said.
A global glut has more than halved iron ore prices in a year as Chinese steel demand slows along with its economy.
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