Brazil’s deadly coronavirus outbreak has disrupted global supplies of iron ore just as demand from China is revving up, pushing the price of the steel ingredient to a seven-month high.
Iron ore is one of the most heavily traded commodities and can influence the price of materials used in everything from buildings to cars. Front-month futures for ore with 62% iron content jumped 10% to nearly ¥759 ($107) a metric ton Wednesday on China’s Dalian Commodity Exchange. That is their highest closing price since October 2019.
Prices have risen 20% since early April, driven by squeezed supplies from Brazil, which dominates the iron-ore mining industry along with Australia. The rally is also an indication that China’s economy is gathering momentum, after a downturn at the start of the year when swaths of the country went into lockdown to stop the coronavirus spreading.
The iron-ore market has been remarkably robust, said John Meyer, head of research at SP Angel, a brokerage for small mining companies in London. “The steel producers in China, they slowed things down during lockdown but have been pretty quick in getting back up to production.”
Higher iron-ore prices will add to pressure on profits at steelmakers globally, but are a boon for miners including BHP Group and Rio Tinto PLC.
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