Iron ore extends gains on Brazil supply worries

* Dalian iron ore up as much as 3.6%, SGX iron ore rises 2.8% * China shares extend rally as investors count on policy support By Enrico Dela Cruz MANILA, July 7 (Reuters) – Iron ore futures extended gains on Tuesday as doubts lingered over prospects of a recovery in shipments from Brazil, while a rally in China stocks and industrial metals also revived market sentiment towards the steelmaking ingredient. Iron ore on the Dalian Commodity Exchange climbed as much as 3.6% to 773.5 yuan ($110.35) a tonne in the morning session, heading for a third straight session of gains. Iron ore on the Singapore Exchange climbed 2.8% to $100.26 a tonne. The rally in China stocks continued even as speculation emerged Beijing was orchestrating it to support an economy pressured by its rivalry with the United States. An editorial on Monday in the official China Securities Journal pointed to government support for a further stock market run-up, saying a vibrant capital market can help the Chinese economy “breed new opportunities in crisis”. Iron ore remains supported on both the supply and demand sides, some analysts said, with spot prices staying above $100 a tonne. SH-CCN-IRNOR62 “Iron ore supply remains tight with the second-largest producer, Brazil, underperforming guidance,” said Justin Smirk, senior economist at Westpac Economic Research in Sydney. “Brazil has become the global epicentre for the COVID–19 outbreak and it is starting to have an impact on iron ore miners.” He singled out miner Vale SA, which has been struggling to regain lost production after a tailings dam disaster last year and disruptions due to a rising tally of coronavirus cases. “With optimism surrounding China’s infrastructure program and resilient housing sector, Chinese demand is likely to absorb most of the shortfall in iron ore demand from the rest of the world,” Smirk said in a note. Construction steel rebar on the Shanghai Futures Exchange gained 0.5%, hot-rolled coil rose 0.7%, and stainless steel climbed 0.9%. Coking coal was flat but coke added 0.9%. $1=7.0096 yuan
Reporting by Enrico dela Cruz; Editing by Subhranshu Sahu,
Reuters