Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

Iron ore extends rally on disappointing Vale output guidance

Published 03/12/2020, 02:58 pm
Updated 03/12/2020, 03:00 pm
© Reuters.

* Dalian iron ore scales new peak at 940 yuan/t

* Spot 62% iron ore hits fresh seven-year high

By Enrico Dela Cruz

MANILA, Dec 3 (Reuters) - China's iron ore benchmark scaled a record high on Thursday after miner Vale SA unveiled output targets that lagged forecasts, adding to concerns about weak seaborne supply.

The Brazilian miner VALE3.SA trimmed its 2020 output guidance to 300 million to 305 million tonnes, from a previous target of at least 310 million tonnes. 2021 production forecast of 315 million to 335 million tonnes, which took into account rainy conditions and other risks, also disappointed some analysts.

The disappointing forecasts added fuel to an iron ore rally that began last week, driven mainly by robust demand in top steel producer China and partly by supply concerns.

Iron ore's most-traded January contract on China's Dalian Commodity Exchange DCIOcv1 rose 2% to 940 yuan ($143.41) a tonne in early trade.

Iron ore on the Singapore Exchange SZZFF1 climbed 0.8% to $132.07 a tonne.

Spot iron ore jumped to $133.50 a tonne on Wednesday, the highest since January 2014, according to SteelHome consultancy data. SH-CCN-IRNOR62

China's iron ore demand revved up in the second half of 2020 as the world's second-largest economy is on track to become the first to fully recover from the COVID-19 pandemic.

"China's infrastructure, property and manufacturing sectors have all surpassed expectations this year," Commonwealth Bank of Australia commodities analyst Vivek Dhar said.

Rising demand and weaker supply have both resulted in a tighter seaborne iron ore market, he said, citing ship-tracking data that indicated lower shipments from top supplier Australia in November.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Steel futures retreated slightly after recent gains, with rebar on the Shanghai Futures Exchange SRBcv1 down 0.3% by 0303 GMT, while hot-rolled coil SHHCcv1 slipped 0.2%. Stainless steel SHSScv1 gained 0.1%.

Tight supply kept coking coal DJMcv1 well supported. Coking coal rose 1.2%, while coke DCJcv1 dropped 0.5%.

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.