SINGAPORE: Spot iron ore prices rose to their highest in more than a week above $61 a tonne as stocks of the raw material at Chinese ports dropped to their lowest level since December 2013, pointing to firm demand as mills rebuild inventories.
Stocks of imported iron ore at major Chinese ports fell for a fifth straight week to 86.70 million tonnes last week, according to data monitored by consultancy SteelHome. The inventory has fallen 15 percent this year.
Chinese iron ore futures also notched up more gains on Tuesday, with the most active contract rising by its upside limit of 4 percent at one stage, suggesting the rally in spot prices could stretch further. “There’s a shortage of cargo at Chinese ports now. It seems foreign miners have slowed down their production and exports as well,” said an iron ore trader in Singapore.
Iron ore for immediate delivery to China’s Tianjin port climbed 2 percent to $61.10 a tonne on Monday, the highest since May 14, according to The Steel Index (TSI). That followed a 4 percent spike on Friday. “Certain grades are now reported to be in short supply,” TSI said, referring to stocks of imported iron ore at Chinese ports.
Imports of iron ore by China, the world’s top buyer of the raw material, were up less than 1 percent at 307 million tonnes in January-April compared with a year before. Worries over a global glut dragged down the price of iron ore to a decade low of $46.70 a tonne in early April.
But the commodity has regained some lost ground amid a decline in cargoes delivered to China. Goldman Sachs estimated there was a supply shortfall of about 6 million tonnes from major suppliers Brazil and Australia last month, with vessel loadings in the latter disrupted by bad weather.
Some traders say there are indications that cargo arrivals in China will improve this week. The most traded iron ore contract on the Dalian Commodity Exchange closed up 2.2 percent at 433 yuan ($70) a tonne, after hitting the upside limit of 440 yuan set by the exchange.
