Dalian iron ore futures rose on Tuesday to end 2019 with a near 141% surge from last year, outperforming other commodities, due to supply disruptions and China's still healthy demand for the steelmaking raw material. The Dalian Commodity Exchange's benchmark iron ore contract , with May 2020 expiry, ended the holiday-thinned trade 0.5% higher at 648.50 yuan ($93.03) a tonne amid firmer steel futures and iron ore spot prices.
On the Singapore Exchange, the front-month January iron ore contract was up 1.2% at $91.25 a tonne in afternoon trade. Spot cargoes of benchmark iron ore with 62% iron content for delivery to China jumped by $1 to settle at $93 a tonne on Monday, data from SteelHome consultancy showed.
The benchmark spot price has risen 28% from the end-2018 level, hitting a peak of $126.50 a tonne on July 3, according to SteelHome data. This came in the wake of miner Vale SA's tailings dam disaster in January and subsequent mine closures in Brazil for safety checks, and operational issues that hit Australian miners early this year.
Spot prices pulled back in the second half of the year as a pick-up in shipments to top steel producer China boosted supply in the spot market. They may weaken further next year, although the magnitude depends in part on how quick Brazil's exports of the commodity will fully recover.
"Roadblocks remain before Vale can return to full capacity. In fact, we don't see them back to full capacity until 2022," analysts at ANZ Research said in their quarterly commodities market outlook.
Supporting prices this year, Chinese steel mills' demand for the raw material remained robust as they ramped up production. China's daily crude steel output climbed 1.9% in November from a month earlier as mills sought to take advantage of strong profit margins and robust demand.
China's crude steel output in 2019 is forecast to reach a record 988 million tonnes, but is expected to ease next year to 981 million tonnes amid the economic slowdown, according to government consultancy China Metallurgical Industry Planning and Research Institute.
The most-traded construction steel rebar on the Shanghai Futures Exchange ended up 0.7%, while hot-rolled steel coil, used in cars and home appliances, climbed 0.8%.
Dalian coking coal advanced 1.0% and Dalian coke gained 1.3%. Shanghai stainless steel futures rose 2.0%. China's iron ore futures topped 2019 as the best performing commodity. Manufacturing activity in China expanded for a second straight month in December. The Shanghai and Dalian commodities exchanges will be closed Wednesday for the New Year holiday. Trading will resume on January 2.