February 1, 2019 / 2:52 AM / 7 months ago

China iron ore, coking coal jump on supply issues, trade deal hopes

MANILA (Reuters) - China’s iron ore and coking coal futures rose sharply in early trade on Friday, buoyed by supply disruption issues and as optimism about a Sino-U.S. trade deal lifted overall investor sentiment in Asia.

FILE PHOTO: Labors work on a pile of iron ore at a steel factory in Tangshan in China's Hebei Province November 3, 2015. REUTERS/Kim Kyung-Hoon

A Chinese trade delegation in Washington said the latest round of talks with the United States made “important progress” for the current stage, China’s official Xinhua news agency reported.

U.S. President Donald Trump said on Thursday he will meet with Chinese President Xi Jinping soon to try to seal a comprehensive trade deal as Trump and his top trade negotiator both cited substantial progress in two days of high-level talks.

The most traded iron ore for May delivery on the Dalian Commodity Exchange rose as much as 4.7 percent to 612 yuan ($90.96) a tonne, its highest in 17 months and extending its rally into a seventh session ahead of next week’s Lunar New Year holiday.

The market is forecast to move into a deficit this year in the wake of a move by Brazil’s Vale SA, the world’s largest iron ore miner, to cut output following a catastrophic dam failure last week.

In another setback for Vale, the city of Mangaratiba, in Rio de Janeiro, has temporarily shuttered the company’s Ilha Guaíba (TIG) iron ore terminal, with the miner also fined for failing to submit environmental licenses, according to a radio report.

“While the company is proposing to increase production elsewhere, we estimate a net total loss of around 13mt (million tonnes) in 2019,” ANZ commodity strategists Daniel Hynes and Soni Kumari said in a note. “This will ultimately push the iron ore market back into deficit this year.”

Spot iron ore for delivery to China was steady at $85.30 a tonne on Thursday after a sharp rise the day before, according to SteelHome consultancy.

The most active coking coal contract for May delivery rose as much as 3.8 percent to 1,284.5 yuan a tonne, its highest in 17 months.

An industrial website has reported that some ports in northeastern China had stopped customs clearings on imported coking coal. Customs at the ports mentioned in the report on Thursday told Reuters that “we have not received such notice”.

Coke was up 1.1 percent at 2,064 yuan a tonne by 0206 GMT.

The most-active rebar contract on the Shanghai Futures Exchange edged up 0.8 percent to 3,726 yuan a tonne. Hot rolled coil inched up 0.7 percent to 3,620 yuan.

Reporting by Enrico dela Cruz; Editing by Subhranshu Sahu

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