Iron ore futures in China rose more than 2% on February 18 after miner Rio Tinto lowered its shipment forecast for the steelmaking raw material from Australia's Pilbara region citing damage to its infrastructure due to the tropical cyclone Damien.
The Anglo-Australian miner , which was the world's top iron ore producer last year, dislodging Brazil's Vale SA, said it will take time for the Pilbara operations to return to normal after the cyclone hit the country's west coast last week.
Rio now expects Pilbara shipments in 2020 to be between 324 million tonnes and 334 million tonnes, lower than its previous outlook of 330 million tonnes to 343 million tonnes.
The Dalian Commodity Exchange's most-traded iron ore contract, with May expiry, rose as much as 2.3% to 645 yuan/t ($92.37/t), its highest since January 23 this year, extending its rally into a sixth consecutive session.
Another major iron ore miner, BHP Group, said supply disruptions have lent support to iron ore prices and that it has not yet seen a major impact on its business from the coronavirus outbreak in top steel producer and iron ore buyer China.
Sparking iron ore's price rally, Vale last week scaled down its first-quarter production outlook following heavy rain in Brazil that hampered its operations.
Spot prices for iron ore also stretched gains to fresh peaks in more than three weeks, with the benchmark 62% grade climbing to $90/t on February 17, data showed.
Iron ore futures on the Singapore Exchange climbed 0.7% to $87.50/t.
"Iron ore imports exhibit weaker Chinese New Year seasonality and have shown a significant decrease in average daily imports between January and February to date, down 260ktd," said French data firm Kpler, which tracks commodity flows, in a note.
Weak downstream steel demand, which has pushed inventories higher, work stoppages and transport restrictions in China to contain the epidemic, kept iron ore's rally in check.
(Writing by Alex Guo Editing by Tammy Yang)
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