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Iron ore futures in top steel producer China jumped more than 3% on Wednesday, underpinned by concerns over supply as traders digested reports of lower import arrivals and shipments departing Australia and Brazil.
The most-traded May contract for the steelmaking ingredient on China’s Dalian Commodity Exchange DCIOcv1 ended daytime session 3.4% higher at 776 yuan ($122.79) a tonne, after touching 776.50 yuan, its highest since Oct. 13.
On the Singapore Exchange, iron ore’s most-active March contract SZZFH2 was up 0.6% at $138.10 by 0706 GMT, erasing early losses.
Supply worries have boosted iron ore prices, which have rebounded this month as China’s stepped up monetary easing efforts to shore up its slowing economy.
Major miners Fortescue Metals Group FMG.AX, BHP Group BHP.AX and Rio Tinto RIO.AX have warned of disruptions from labour shortages as Australia faces a surge of Omicron coronavirus variant cases.
The spot price of benchmark 62%-grade iron ore for delivery to China SH-CCN-IRNOR62 jumped to $138 a tonne on Tuesday, the strongest since Sept. 7, according to SteelHome consultancy price assessment.
“The first quarter is the off-season for overseas mine shipments,” Zhongzhou Futures analysts said in a note on the company’s website. “It is necessary to pay attention to the impact of… weather, epidemics, etc. on mine shipments.”
A La Nina weather phenomenon has developed in the Pacific Ocean for the second year in a row, analysts said it could mean greater rainfall and more tropical cyclones in Australia, where the cyclone season usually runs from November to April.
Australia accounts for about 60% of iron ore shipments to China, while Brazil is the second-biggest supplier with a share of about 20%.
Construction steel rebar on the Shanghai Futures Exchange SRBcv1 rose 0.4%, while hot-rolled coil SHHCcv1 gained 0.2%. Stainless steel SHSScv1 dropped 0.5%.