February 1, 2019 / 8:15 AM / 22 days ago

UPDATE 1-China iron ore rallies to 22-month peak, coking coal at 17-mth high

* Iron ore gains as much as 6.6 pct, up for 7th day

* Iron ore market seen moving into deficit - ANZ

* Dozens of coal, iron ore ships stuck off China ports

* Tangshan to impose steel output cuts in April-Sept (Recasts, adds closing prices, more comments)

By Enrico Dela Cruz

MANILA, Feb 1 (Reuters) - Prices of steel-making raw materials in China climbed to multi-month peaks on Friday, buoyed by supply disruption issues, with iron ore hitting its highest level in 22 months after a seven-day rally.

The most traded iron ore contract on the Dalian Commodity Exchange rose to as high as 623 yuan ($92.46) a tonne, up 6.6 percent, and was at 621.5 yuan at the end of trading, extending its rally into a seventh session.

Iron ore posted its fifth straight weekly gain and surged more than 20 percent this year. The market is forecast to move into a deficit this year in the wake of a move by top iron ore miner Vale SA to cut output following a catastrophic dam failure in Brazil last week.

“While the company is proposing to increase production elsewhere, we estimate a net total loss of around 13 mt (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.”

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.

Dozens of ships carrying coal and iron ore to China are stuck outside ports waiting to unload, according to shipping data. This is likely to increase supply concerns. Harbour authorities are taking longer than usual to clear the imports with customs officials, according to traders.

News that China and the United States made “important progress” in the latest round of talks to end their festering trade dispute also buoyed the market.

U.S. President Donald Trump said on Thursday he will meet 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.

“There’s less uncertainty in the trade talks and that’s what the market likes to see,” said Helen Lau, analyst, Argonaut Securities.

The most active coking coal contract rose as much as 4.2 percent to a 17-month-high 1,290 yuan a tonne, before ending the session at 1,288.5 yuan. Coke jumped 3.4 percent to 2,112.5 yuan.

The most-active rebar contract on the Shanghai Futures Exchange rose 1.6 percent to 3,754 yuan a tonne. Hot rolled coil gained 1.5 percent to 3,648 yuan.

Steel’s gains also followed a report that China’s top steel-making city, Tangshan, will impose output restrictions to its heavy industries, including steel and coke, from April to September, to improve its air quality.

The Shanghai Futures Exchange will close next week for China’s Lunar New Year holiday and reopen on Feb. 11.

($1 = 6.7384 Chinese yuan)

Reporting by Enrico dela Cruz; Editing by Subhranshu Sahu and Sherry Jacob-Phillips

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