Iron ore’s gone from loathed to loved. The commodity capped a third weekly gain that lifted prices to the highest in almost five months on lower port stockpiles in China and speculation local production is contracting.
Ore of benchmark-grade 62 percent content delivered to Qingdao climbed 1.1 percent this week for the longest weekly run since April, according to Metal Bulletin Ltd. The commodity retreated 0.7 percent to $65.13 a dry metric ton on Friday after reaching $65.61 on June 11, the highest since Jan. 23.
Iron ore’s roller-coaster ride this year saw prices sink to a decade-low in early April on rising low-cost supply from the top producers and concern demand in China may falter as growth slowed. Tumbling stockpiles in the biggest buyer, as imports missed expectations, helped to spur back-to-back gains in April and May, and prices extended the rally into June. Goldman Sachs Group Inc. is among banks predicting the factors that hurt prices in the first quarter will soon reassert themselves.
“There’s been a significant destocking gone on and that would be why we’ve seen the iron ore price rising, seasonal factors and the fact that they are destocking,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “There’s a lack of inventory in China.”
Iron ore gained 27 percent this quarter and is set for the first such advance since the final three months of 2013. Its performance beat all constituents in the Bloomberg Commodity Index, which added 2.9 percent in the period, led by West Texas Intermediate crude oil, gasoline and Brent.
Holdings at ports in China fell 13 percent to 85.4 million tons last month, and extended the drop in the first week of June to 83.8 million, according to Shanghai Steelhome Information Technology Co. That’s the lowest since November 2013.
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