Dalian and Singapore iron ore futures slipped on Thursday after Brazil’s Vale SA was allowed to resume operations at a coronavirus-shuttered mining complex, but hopes of resilient demand in China capped losses.
Iron ore on China’s Dalian Commodity Exchange closed a volatile session 1.0% lower at 765 yuan ($108.10) a tonne. On the Singapore Exchange, the front-month contract dipped 0.3% in afternoon trade.
Iron ore miner Vale can now reopen mines in the Itabira complex, where 188 workers had tested positive for the new coronavirus, as the government believes the company’s measures to mitigate the virus threat were sufficient to restart works.
The Dalian iron ore has gained 32% in the second quarter, underpinned by earlier worries about further disruptions in Brazil’s supply of the steelmaking ingredient and hopes that China will step up its economic stimulus effort.
“The market is assuming a large stimulus package in China will drive steel demand higher, but robust demand there will not offset weak demand elsewhere,” said Daniel Hynes, senior commodity strategist at ANZ.
“And, in the absence of supply disruptions, prices are likely to come under pressure,” he said in a note.
FUNDAMENTALS
* China’s state planner called for an all-out effort to prevent shuttered illegal steel capacity from restarting, to ensure the country doesn’t toss away progress in supply-side reform right at the end of a five-year campaign.
* China will maintain ample financial system liquidity in the second half of the year as the economy recovers from the coronavirus, but its central bank governor underscored the need to consider withdrawing that support at some point.
* Construction steel rebar on the Shanghai Futures Exchange rose 0.6%, hot-rolled coil climbed 1.6% and stainless steel gained 0.1%.
* Coking coal advanced 1.1% and coke added 0.7%.
Source:Reuters
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