China’s iron ore futures, which fell on Friday, marked a fifth straight weekly gain on buoyant demand outlook for the steelmaking ingredient in China and concerns over supply from key exporter Brazil.
Iron ore for September delivery on the Dalian Commodity Exchange, which closed down 0.9% at 746 yuan ($105.26) a tonne, was up 2.3% for the week.
On the Singapore Exchange, however, the most-traded iron ore for July delivery rose 1.5% to $97.10 a tonne in afternoon trade.
“We feel iron ore’s recent rally looks increasingly stretched, with strengthening headwinds in the steel industry likely to put downward pressure on prices in the coming months,” said Daniel Hynes, a senior commodity strategist at ANZ.
Global steel demand is expected to fall 6.4% this year due to the COVID-19 pandemic’s impact on industrial and construction activity, but will bounce back next year, the World Steel Association (worldsteel) said on Thursday.
Robust China demand and concerns over the rising coronavirus cases in Brazil have driven spot prices for the steelmaking ingredient beyond $100 a tonne.
Benchmark 62% iron ore’s spot price settled at $102 a tonne on Thursday, near a 10-month high, SteelHome consultancy data showed. SH-CCN-IRNOR62
Despite some doubts that the $100 per tonne price level is unsustainable as Brazil supply risks may ease eventually, analysts said a sudden pullback was unlikely given the upbeat outlook for Chinese steel demand.
