02 Dec Iron Ore Set for Biggest Weekly Gain in Two Months on Restocking
By Krystal Chia
(Bloomberg) — Iron ore futures were on course for the biggest weekly gain in nearly two months on restocking demand from China’s mills and lower global supplies.
The raw material has climbed this week after producer Vale SA trimmed guidance and mill demand improved. Still, prices have more than halved since a peak in May and capped a record run of monthly losses in November as output curbs in China restricted demand over the year.
Healthy profits at steel mills are helping short-term restocking activity, said Huatai Futures Co. analyst Wang Haitao. Still, over the long term, muted steel volumes and consumption create a bearish outlook for iron ore prices.
Investors also need to monitor the impact of the recent Covid-19 outbreaks on crude-steel consumers, said Wang. China reported 73 coronavirus infections on Dec. 1, and halted a railway border crossing with Mongolia due to the outbreak.
On supply, shipments last month remained weak due to heavy rainfall in Brazil, for both of Vale’s Northern and Southern mining systems, according to dry-bulk tracking firm DBX Commodities. Major maintenance at Australia’s Port Hedland has also impacted shipments for BHP Group and Fortescue Metals Group Ltd., it said.
Iron ore futures in Singapore traded 0.6% higher at $104.05 a ton at 11:50 a.m., heading for a weekly gain of more than 8.5%, the most since Oct. 8. Futures in Dalian declined, while steel rebar and hot-rolled coil futures in Shanghai dropped.
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