UPDATE 1-Iron ore extends gains as Brazil supply worries persist

UPDATE 1-Iron ore extends gains as Brazil supply worries persist

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 Dalian iron ore ends up 2.7%, SGX iron ore rises 2.1%

* China shares extend rally as investors count on policy support

* Australia, Brazil iron ore shipments down w/w – Mysteel (Updates with Mysteel’s latest iron ore shipment estimate, closing prices and chart)

By Enrico Dela Cruz

MANILA, July 7 (Reuters) – Iron ore futures extended gains on Tuesday as doubts lingered over prospects of a recovery in shipments from Brazil, while a rally in China stocks and industrial metals also revived market sentiment towards the steelmaking ingredient.

Iron ore on the Dalian Commodity Exchange rose for a third straight session, closing 2.7% higher at 767 yuan ($109.23) a tonne. Iron ore on the Singapore Exchange climbed 2.1% in afternoon trade.

The Chinese stock market extended its positive run, in line with Beijing’s push for a stronger market.

Iron ore remains supported on both the supply and demand sides, some analysts said, with spot prices range-bound above $100 a tonne. SH-CCN-IRNOR62

Iron ore supply remains tight with the second-largest producer, Brazil, underperforming guidance,” said Justin Smirk, senior economist at Westpac Economic Research in Sydney.

“Brazil has become the global epicentre for the COVID–19 outbreak and it is starting to have an impact on iron ore miners.”

He singled out miner Vale SA, which has been struggling to regain lost production after a tailings dam disaster last year and disruptions due to a rising tally of coronavirus cases.

Iron ore shipments to various destinations from Australia and Brazil dropped 7.6% over June 29-July 5 from a week earlier to 26.3 million tonnes, after rising steadily for three weeks, according to consultancy Mysteel’s latest survey.

“With optimism surrounding China’s infrastructure program and resilient housing sector, Chinese demand is likely to absorb most of the shortfall in iron ore demand from the rest of the world,” Smirk said in a note.

Construction steel rebar on the Shanghai Futures Exchange gained 0.5%, hot-rolled coil rose 0.8%, and stainless steel climbed 0.7%.

Coking coal slipped 0.3%, but coke added 0.9%.

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