MANILA: Dalian iron ore rose on Thursday after three sessions of losses, with the resumption of production at some steel mills in China providing support to the steelmaking ingredient, but doubts over the sustainability of a demand recovery capped gains.
The most-traded iron ore, for January delivery, on China’s Dalian Commodity Exchange was up 0.6% at 687.50 yuan ($99.60) a tonne, as of 0306 GMT. Other Dalian contracts were also higher, with September and October iron ore rising 0.5% and 1.1%, respectively.
“The short-term demand is relatively strong,” Sinosteel Futures analysts said in a note, adding that iron ore might have bottomed out. Some steel mills with low iron ore inventories were seen replenishing their stocks. But overall market confidence remained weak amid lingering concerns about COVID-19 curbs, mandatory steel output cuts, and a property sector downturn in China, the world’s top steel producer.
Iron ore’s most-traded October contract on the Singapore Exchange fell 1% to $99.65 a tonne. Parts of China’s southern city of Guangzhou imposed COVID-19 curbs on Wednesday, joining the tech hub of Shenzhen in battling flare-ups, fuelling uncertainty over commerce and daily life in two of the region’s most economically vibrant metropolises.
Increased steel supply as Chinese mills ramp up output could eventually re-ignite downward pressure on the prices of ferrous commodities.
Steel prices are likely to weaken again in September with increasing supply a major drag, said industry information provider Mysteel, citing chief analyst Wang Jianhua. Steel prices, however, could still find some support during what is traditionally a peak demand season between September and October, when construction activity picks up in China ahead of winter.
Rebar on the Shanghai Futures Exchange rose 0.3%, while hot-rolled coil gained 0.5%. But stainless steel dropped 0.7%. Dalian coking coal fell 1.8% and coke slipped 0.5%.
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