SHANGHAI, Feb 25 (SMM) – Dalian iron ore futures prices closed lower on Tuesday, snapping a 10-day winning streak, as concerns about supply slightly eased after data showed that shipments from Australia and Brazil recovered last week.
The most active iron ore contract on the Dalian Commodity Exchange for May delivery dropped more than 2% in early trade on Tuesday, before it recouped some losses to end the day 0.52% lower at 672.5 yuan/mt, still standing well above lows hit in early February.
SMM data showed that iron ore deliveries leaving Australian ports increased 4.28 million mt from the previous week to 14.45 million mt in the week ended February 22, and that those leaving Brazilian ports rose 480,000 mt to 4.61 million mt.
Iron ore shipments from Australia plunged earlier this month, as a tropical cyclone struck Western Australia state and shuttered ports.
Supply from Brazil was hit by heavy rain that affected mining operations. Last week’s shipments were 1.78 million mt lower from the same period last year.
The recent surge in new cases from the coronavirus outside China is likely to hurt iron ore demand, which will prompt miners to step up shipments to China, easing iron ore supply tightness there.
Steel production curtailments that would reduce demand for the raw material—iron ore also weighed on iron ore prices. The latest SMM data showed that more steel mills in China have trimmed output due to weaker-than-expected demand recovery, high inventory pressure, environmental restrictions and other reasons.
Over 47% of blast-furnace steelmakers in China have scaled back operations for maintenance, according to the SMM survey of 102 mills as of Monday February 24.
China iron ore prices may stage a pullback in the near term, as demand has yet to recover to normal levels, but the medium-term outlook is bullish as Beijing has launched a raft of support measures to offset the economic impact from the epidemic.
On Tuesday, the ferrous complex traded mixed. Shanghai rebar gained 0.2%, while hot-rolled coil edged down 0.03% and stainless steel shed nearly 1%. On the DCE, coke advanced 0.1% and coking coal rose close to 0.6%.