Iron ore futures in China surged more than 5 percent on Wednesday, supported by rising steel prices and a plan by Chinese miners to seek an anti-dumping investigation into imports of the raw material from Australia and Brazil.
More than 1,000 Chinese iron ore mines have shut since last year because of a huge volume of imported ore, according to a statement posted on the Metallurgical Miners’ Association of China website on Tuesday.
“Anti-dumping duties – if introduced – would be price supportive as imports from Australia and Brazil would become more expensive,” said Julius Baer analyst Carsten Menke.
Menke said the level of price support would depend on the actual level of duties.
The most-traded September iron ore on the Dalian Commodity Exchange rose as much as 5.2 percent to 464 yuan ($70) a tonne, a level last seen on July 18. It was up 4.9 percent at 462.50 yuan by 0237 GMT.
Iron ore miners from Australia and Brazil have embarked on massive expansion programmes in recent years to supply the Chinese market.
Australia’s Fortescue Metals Group, the world’s No. 4 supplier, on Wednesday set its shipment guidance for fiscal 2017 at 165 million to 170 million tonnes, little changed from the 169.4 million tonnes shipped in fiscal 2016.
The raw material was also buoyed by rising steel prices amid tighter supply due to fresh environmental inspections across eight Chinese provinces that have led to closures of some facilities, traders and analysts say.
“We’ve heard that some facilities have been asked to shut down because of environmental issues,” said Richard Lu, analyst at CRU consultancy in Beijing.
“The current availability of steel is quite low.”
Prior to the inspections, there had already been deeper mandated output cuts in Tangshan city in the top steel-producing province of Hebei to improve air quality ahead of Thursday’s commemoration of a 1976 earthquake that killed at least 250,000 people.
The most-active rebar, a construction steel product, on the Shanghai Futures Exchange was last up 4.2 percent at 2,436 yuan a tonne, after earlier peaking at 2,449 yuan, also a 1-1/2-week high.
Firmer iron ore futures should push up bids further for physical cargoes, traders said, and lift the spot benchmark closer towards $60 a tonne.
Iron ore for delivery to China’s Tianjin port .IO62-CNI=SI rallied 2.9 percent to $57.40 a tonne on Tuesday, the highest since July 15, according to The Steel Index.
Source : hellenicshippingnews.com