Iron ore appreciates as supplies from Brazil lower, housing market in China booms

Iron ore rose on signs of tighter supply from Brazil, while Chinese steel production is expected to increase to meet increased demand during the peak construction season in the second quarter.

The daily average of Brazilian iron ore exports was 1.14 million tonnes in the first 18 days of March, down from 1.3 million tonnes per day in February.

At the same time, China’s real estate sector is booming, with new home sales rising in three major cities, including Beijing, last week. Construction accounts for around 40% of steel demand in the country.

According to Huatai Futures, in the meantime, stocks of steel products are running. However, the supply of ore to production plants does not only depend on the demand for steel.

It will also be influenced by the tight grip of Chinese authorities, which seek to combat alleged price manipulation and raw material accumulation in the market, resulting in a sharp drop in prices last week.

Ore futures in Singapore rose up to 2.1% this Tuesday (28) to US$ 121.75 a tonne. On the Chinese exchange in Dalian, the price rose 1.2%, while steel rebar and hot rolled coil futures appreciated in Shanghai.

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