June 4, 2020 / 4:15 AM / a month ago

Iron ore volatile as $100/T price seen unsustainable

* Dalian iron ore erases gains after rising as much as 2.3%

* Shanghai rebar steel scales new peak since February 2011

By Enrico Dela Cruz

MANILA, June 4 (Reuters) - Dalian and Singapore iron ore futures fell on Thursday after rising in early trade on concerns over supply from key exporter Brazil and robust steel demand in China.

Iron ore’s most-traded September contract on China’s Dalian Commodity Exchange closed down 0.3% in the morning session, after rising as much as 2.3% to 770 yuan ($108.03) a tonne. Iron ore for July delivery on the Singapore Exchange also erased early gains and was down 1.1%.

“The supporting fundamentals remain intact – inventories in China continue falling, while Brazilian supply looks increasingly restricted by the COVID-19 outbreak in its backyard,” said OCBC economist Howie Lee in Singapore.

“I expect prices to stay close to the $100 level until towards the end of June,” he said, but added that prices at this level may not be sustainable for the smaller mills in China and the $80-$90/tonne level seems “more palatable for steel margins at present”.

Brazil’s iron ore exports fell 13% in May from a year earlier, ANZ said citing government data, as miner Vale SA struggles to restart operations shuttered after last year’s dam disaster.

Concerns linger over potential further disruption of mining operations in Brazil, which registered a record number of daily deaths from the coronavirus for a second consecutive day, according to Health Ministry data released on Wednesday.

Benchmark 62% iron ore’s spot price retreated from a 10-month high to $101.50 a tonne on Wednesday, SteelHome consultancy data showed. SH-CCN-IRNOR62

FUNDAMENTALS

* Construction steel rebar on the Shanghai Futures Exchange rose as much as 1.1%, scaling a new peak since February 2011 at 3,679 yuan a tonne.

* Hot-rolled coil was down 0.3%, while stainless steel dipped 1.5%.

* Coking coal gained 0.3%, while coke advanced 2.3%.

($1 = 7.1276 yuan)

Reporting by Enrico dela Cruz; Editing by Vinay Dwivedi

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