Iron ore prices are headed for their biggest weekly gain since early May as a looming strike at BHP‘s (NYSE, LSE, ASX: BHP) Port Hedland export terminal raises supply concerns despite weakening Chinese steel market fundamentals.
The steelmaking ingredient climbed 1.6% this week, with Singapore Exchange futures rising 0.6% to $99.35 per tonne by 10:54 a.m. local time on Friday after clearing the $99 level. The rally followed three weekly losses in four weeks during June as seasonal demand softened, steel mill margins narrowed, seaborne supply increased and Chinese port inventories remained elevated.
Unions representing workers at BHP’s Western Australia terminal plan an eight-hour work stoppage on July 16, potentially disrupting exports from the world’s largest iron ore shipping hub.
The market also continues to monitor China’s unresolved dispute with Fortescue (ASX: FMG) where restrictions on the company’s Super Special Fines product remain in place. State-backed buyer China Mineral Resources Group has asked several steel mills and traders to avoid purchasing new U.S. dollar-denominated cargoes.
Traders are now watching whether disruptions in Australia can keep prices supported as steel market conditions remain weak.
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