Iron ore prices climb as Russia-Ukraine conflict stokes supply concerns


By Enrico Dela Cruz

Feb 28 (Reuters) - Benchmark iron ore futures in China and Singapore climbed on Monday over concerns that a prolonged armed conflict between Russia and Ukraine could curb global supply of the key steelmaking ingredient.

The most-traded May iron ore contract on China's Dalian Commodity Exchange DCIOcv1 ended daytime trading 2.7% higher at 705.50 yuan ($111.82) a tonne, after touching 712 yuan earlier in the session.

On the Singapore Exchange, iron ore's most-active April contract SZZFJ2 rose as much as 3.3% to $141.25 a tonne.

"Any prolonged military campaign will severely impact annual iron ore exports totalling almost 70 million tonnes from Russia and Ukraine, eventually tightening the global balance," said Atilla Widnell, managing director at Navigate Commodities in Singapore.

While Russia and Ukraine are not major suppliers of iron ore to China, as the world's biggest steel producer meets most of its requirements from Australia and Brazil, the two countries now at war usually export it to other European countries.

Russia's invasion of Ukraine has triggered wide-ranging Western retaliation, with the harsh sanctions including blocking some Russian banks from the SWIFT international payments system.

As this month's Beijing Winter Olympics has ended, rebounding Chinese blast furnace capacity utilisation rates, which should result in the quicker drawdown of iron ore inventories at Chinese ports, are also expected to offer further price support, Widnell said.

Support for iron ore remained intact even as China's state planner kept a close eye on market activities following the recent strong price rally.

The National Development and Reform Commission, which has warned against iron ore hoarding, market speculation and disinformation, on Monday reminded traders of regulators' increased supervision of both spot and futures markets to ensure stable prices.

Construction steel rebar SRBcv1 gained 2% on the Shanghai Futures Exchange, while hot-rolled coil SHHCcv1 advanced 3.5%. Stainless steel SHSScv1 slumped 3.2%.

Dalian coking coal DJMcv1 added 1.1% and coke DCJcv1 inched up 0.2%.

(Reporting by Enrico Dela Cruz in Manila; Editing by Sherry Jacob-Phillips and Vinay Dwivedi)


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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