Iron ore prices ticked up on Wednesday, as a flurry of pre-holiday restocking by Chinese steelmakers countered concerns of rising supply following the resolution of a months-long contract dispute between BHP Group and China.
BHP, the world’s third-largest iron ore supplier, said it had concluded iron ore sales contract negotiations with the China Mineral Resources Group (CMRG), the state iron ore buyer.
Reuters reported last week that CMRG had lifted bans on procurement of the key steelmaking ingredient from BHP after the miner’s top executives visited China.
The most-traded iron ore contract on China’s Dalian Commodity Exchange (DCE) closed daytime trade 0.32% higher at 786.5 yuan ($115.32) a metric ton. The contract hit its strongest level since April 8 at 790 yuan earlier in the session.
By 07:06 GMT, the benchmark May iron ore on the Singapore Exchange was up 0.28% at $107.2 a ton, its highest since March 30.
“As the term contract negotiation (between BHP and CMRG) has finalized, bearish factors have largely been priced in,” analysts at broker Yongan Futures said in a note.
“Near-term demand is robust in the run-up to the holiday break, supporting prices, so prices will consolidate in the short run.”
Chinese steelmakers typically replenish feedstock ahead of the May Day holiday from May 1-5.
BHP said it expected seaborne iron ore demand to plateau at the current level over the next few years, with a slight reduction in China offset by growth in emerging economies and recovery in Europe.
Coking coal and coke, other steelmaking ingredients, gained 1.07% and 0.63%, respectively.
Steel benchmarks on the Shanghai Futures Exchange moved sideways. Rebar added 0.31%, hot-rolled coil advanced 0.62%, wire rod nudged down 0.06%, while stainless steel lost 0.5%.
($1 = 6.8203 Chinese yuan)
(By Amy Lv and Tony Munroe; Editing by Subhranshu Sahu)
