Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Iron Ore Futures Power Toward $100 a Ton on Record Monthly Rally

Published 29/05/2020, 09:13
Updated 29/05/2020, 09:36
© Reuters.

© Reuters.

(Bloomberg) -- Iron ore futures powered toward $100 a ton in Singapore, lifted by a record monthly advance that’s been driven by supply woes in Brazil and sustained, robust demand in top steel producer China.

Most-active futures have jumped 22% in May as Brazil, the world’s second-largest exporter, saw a surge in coronavirus infections, stoking worries that the pandemic may curb local supply. Last month, miner Vale SA (NYSE:VALE) cut its annual shipment guidance on bad weather and the virus’s impact on operations. Meanwhile, port stockpiles of iron ore in China have continued to decline.

The industrial staple has prospered in 2020 even as the coronavirus pandemic hammered industrial activity in many economies, although Bloomberg Intelligence has been among observers warning that market may flip to a surplus in the second half. In addition to Vale, the higher prices will bolster returns at BHP Group (NYSE:BHP), Rio Tinto (NYSE:RIO) Group and Fortescue Metals Group (OTC:FSUGY) Ltd.

The early resumption of industrial operations in China has fueled a recovery in downstream activity and steel mills continue to increase output, China International Capital Corp. analysts including Ma Kai wrote in a note. “Iron ore will fundamentally maintain a tight balance this year,” with supply gradually recovering from the third quarter, they said.

Prices jumped as much as 5.7% to $98.24 in Singapore, and traded at $98.16 at 3:16 p.m. local time, set for the highest close since August. On the Dalian Commodity Exchange, futures have rallied 23% this month.

Credit Suisse (SIX:CSGN) Group AG recently estimated that the market is now at “peak tightness,” a condition that will probably persist until July. Bloomberg Intelligence expects a 34-million-ton surplus in the second half on higher supply and stagnating demand, flipping from a 25-million-ton deficit in the first half.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.