China's iron ore futures edged higher on January 16, extending gains for a third straight day as traders assessed the disruption to supply following a fire at a Rio Tinto export terminal in Australia.
Rio Tinto said on January 14 it had declared force majeure on iron ore shipments to some customers following the fire at its Cape Lambert export terminal last week.
The most traded iron ore contract on the Dalian Commodity Exchange rose as much as 1.4% to 516 yuan/t ($76.22/t) in early trade.
Helen Lau, an analyst at Argonaut Securities in Hong Kong, said the uptrend in iron ore prices has been driven by both the supply disruption and expectations of a boost in demand for the steel-making raw material from Beijing's moves to stimulate the slowing Chinese economy.
"China's stimulus measures may boost steel production and that will support iron ore demand," she said. "The supply disruption in Australia is adding some supply concern and that explains why the price went up."
Cape Lambert is one of two ports Rio uses to ship iron ore from Australia's Pilbara mining region. The port has an annual iron ore shipping capacity of 205 million tonnes, according to the miner's website.
Coking coal, however, fell 1.0% to 1,226.5 yuan/t as of 0237 GMT, extending losses after recent gains. Coke was up a marginal 0.1% at 2,014 yuan/t.
The most-active rebar contract on the Shanghai Futures Exchange was down 0.2% at 3,527 yuan/t. Hot rolled coil was up just 0.1% at 3,425 yuan/t in listless trade.
"There are still some short-term headwinds in the steel market. It's mainly because of the weak (demand) seasonality during the winter time, before the Chinese New Year," Lau said.
Spot 62%-Fe iron ore for delivery to China was steady at $74.80/t on January 15, data showed.
Source:sxcoal
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