“Iron ore futures extended gains as sentiment remained buoyed by signs of strong demand in China,” ANZ senior commodity strategist Daniel Hynes told Reuters.
CHINA’S IRON ORE PORT INVENTORY HIT A FOUR-MONTH LOW LAST WEEK, WHILE WEEKLY SHIPMENT ARRIVALS FELL
Stocks at 184 Chinese steel mills covered by Mysteel consultancy’s weekly survey stood at just over 6 million tonnes as of Wednesday, up 2.7% from last week partly due to increased output, it said.
Concerns over tight global iron ore supply also supported prices. China’s iron ore port inventory hit a four-month low last week, while weekly shipment arrivals fell.
Adding to supply concerns, Brazil’s Vale SA halted production at two mines and decommissioned a dam over safety concerns.
“This could further delay the recovery in iron ore output in Brazil,” Hynes said.
Iron ore exports from top producers improved in May, but Rio Tinto and Vale will need to lift run rates over the second half of 2021 to meet their sales guidance, S&P Global Platts wrote in a research note.
According to S&P data, shipments from Rio Tinto, BHP, Vale, Fortescue Metals Group and Roy Hill, and Saldanha port in South Africa, reached 99.4 million tonnes in May, the highest level so far this year, up 7.8% month on month and a 3% increase year on year.
Vale said its iron ore production would be 315 million-335 million tonnes in 2021.
“Over January-May, Vale exported iron ore at an annualized run rate of 251.7 million tonnes, indicating it is far off meeting guidance and taking into account it sells around 25 million tonnes of iron ore into the Brazilian market,” said S&P Global Platts.