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China iron ore futures rose more than 5% on Wednesday, on growing concerns about supply of the steelmaking raw material as more countries ordered lockdowns to contain the spread of the COVID-19 pandemic.
The most active iron ore contract on the Dalian Commodity Exchange for May delivery opened the day higher and extended its gains to end the day 5.06% higher at 665 yuan/mt.
Some ports in India, one of the world’s top iron ore producers, including ports of Dhamra, Krishnapatnam, Gangavaram and Gopalpur, have declared force majeure after India's Prime Minister Narendra Modi on Tuesday ordered a nationwide 21-day lockdown.
The National Mineral Development Corporation (NMDC), has reportedly suspended its iron ore production and shipments from this afternoon until further notice. The NMDC is India's single largest iron ore producer.
Customs data showed that China’s iron ore imports from India accounted for 2.2% of the country’s total iron ore imports of 1.07 billion mt in 2019.
India’s move came a day after South Africa, another major iron producing country, announced a nationwide lockdown, which will start from Thursday and also last for three weeks.
Australia, home to some of the world's biggest iron ore miners, was also ramping up lockdown measures.
Brazilian miner Vale SA has suspended operations at its distribution facility in Malaysia.
Iron ore prices were also underpinned by improved market sentiment. Global markets have rallied on hopes for a gigantic $2 trillion US coronavirus relief package, which received green light from the Senate early Wednesday stateside.
The Federal Reserve’s pledge on Monday to buy unlimited amounts of Treasuries and mortgage bonds has also helped stabilise the market.
On the Shanghai Futures Exchange, construction steel rebar contract for October delivery jumped 1.5% on Wednesday, while the hot-rolled coil 2010 contract gained 1.2% and the stainless steel 2006 contract rose 1.5%.