May 21, 2020 / 8:38 AM / in 3 months

UPDATE 1-Iron ore ends higher as coronavirus crisis hampers Brazil supply

* Dalian iron ore surges past $100/tonne, up for seventh day

* Benchmark spot 62% iron ore hits highest since August 2019

* China to simplify customs inspections on iron ore imports (Recasts, updates with chart and closing prices)

By Enrico Dela Cruz

MANILA, May 21 (Reuters) - Dalian iron ore futures surged past $100 a tonne on Thursday, recovering lost ground as concerns about tightening supply of the steelmaking commodity from coronavirus-hit Brazil prevailed over a bleak outlook for global steel demand.

Iron ore on the Dalian Commodity Exchange closed 2.1% higher at 722 yuan ($101.67) a tonne, rising for a seventh straight session.

The Singapore Exchange’s front-month contract also clawed back early losses, up 1.7% at $95.42 a tonne in afternoon trade.

After Brazilian iron ore miner Vale SA cut its 2020 production outlook to 310 million-330 million tonnes, from 340 million-355 million tonnes previously, “more downgrades may be on the way as COVID-19 infections accelerate in Brazil’s key mining provinces”, said Morgans Financial Ltd in a note.

Hopes of more government stimulus to prop up China’s economy added fuel to the rally that has pushed the Dalian benchmark up over 20% this year.

Benchmark spot 62% iron ore bound for China climbed to $98.20 a tonne on Wednesday, the highest since Aug. 6, SteelHome consultancy data showed. SH-CCN-IRNOR62

Iron ore’s advance, however, “looks increasingly stretched” as the market faces downside risks such as a sharp fall in global steel demand this year and increased shipments from Brazil and Australia when the pandemic eases, ANZ commodity strategists said.

FUNDAMENTALS

* Concerns emerged that the flow of Australian iron ore to China could also be hampered because of trade tensions between the two countries.

* The Australian government, however, said the change in China’s iron ore inspection procedures, announced on Wednesday, should streamline customs clearance of Australian shipments, reassuring markets worried about their deteriorating ties.

* Construction steel rebar on the Shanghai Futures Exchange rose 0.8%, while hot-rolled coil gained 0.6% and stainless steel advanced 1.4%.

* Coking coal was up 0.4%, while coke climbed 1.5%.

($1 = 7.1011 yuan)

Reporting by Enrico dela Cruz; Editing by Devika Syamnath and Sherry Jacob-Phillips

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