Rio Tinto ready to build Simandou after almost 30 years of setbacks
Simandou has faced delays due to legal disputes, political changes, and the challenges of building a 600 km rail and port infrastructure.
Iron ore futures rebounded on Wednesday to hit a more than five-week high, helped by an improving steel market and anticipation of pre-holiday restocking by steelmakers in top consumer China.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 4.25% higher at 870 yuan ($120.20) a metric ton, the highest since March 11. It fell more than 1% on Tuesday.
The benchmark May iron ore on the Singapore Exchange climbed 5.63% to $115.55 a ton, as of 0700 GMT, hitting the highest since March 8.
Near-term ore demand will remain solid as mills show increasing willingness to resume production after an improvement in margins and downstream demand, said analysts.
Steel mills are currently enjoying the best moment so far this year in terms of profitability, and those along the coastal regions with the best cost-controls could make a gross profit of 300 yuan and 400 yuan a ton, analysts at information provider Custeel said in a research note.
“Steelmakers will need to restock raw materials with the approaching of the May Day holiday break,” analysts at Galaxy Futures said in a note.
While construction steel demand remains relatively weak compared with a year earlier, steel consumption from the manufacturing sector has been robust, Huatai Futures analysts said.
Meanwhile, data from information provider Gangguwang showed that China’s apparent construction steel consumption has risen more than 10% week-on-week as of April 17.
By comparison, global iron ore shipments fell because of unfavourable weather, although high portside stocks were still deemed as a headwind.
Rio Tinto reported a 5% fall in first-quarter iron ore shipments, while Vale posted a growth of 6.1% in first-quarter iron ore production.
Other steelmaking ingredients on the DCE also gained, with coking coal and coke up 2.64% and 1.87%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were broadly higher. Rebar added 1.94%, hot-rolled coil climbed 1.29%, wire rod advanced 0.74% and stainless steel ticked up 0.43%.
($1 = 7.2377 Chinese yuan)
(By Amy Lv and Andrew Hayley; Editing by Subhranshu Sahu)
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