By Joe Wallace
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.”