Chinese iron ore futures rise to eight months high

Chinese iron ore futures climbed to their highest in almost eight months on Monday, supported by firm demand for the steelmaking raw material in the world's top consumer as stockpiles at its ports dropped last week. Inventories of iron ore at China's major ports fell 150,000 tonnes from the previous week to 143.85 million tonnes on Friday, data compiled by the SteelHome consultancy showed.
The port stocks have dropped 11 percent since hitting a record-high of 161.98 million tonnes in June. The most-traded January iron ore on the Dalian Commodity Exchange rose as far as 546.50 yuan ($78.57) a tonne, its loftiest since March 5. It closed up 0.7 percent at 538 yuan a tonne.
"Steel production remains high and the use of iron ore is very high," said an iron ore trader in China's port city of Rizhao. China's daily crude steel output rose to a record 2.7 million tonnes in September as mills in the world's top producer chased strong profit margins before the start of winter production curbs aimed at tackling smog.
But this year's restrictions are expected to be more lenient than during the winter of 2017 after China allowed local governments to set their own production limits instead of implementing blanket curbs. Spot iron ore for delivery to China reached $76.40 a tonne on Friday, unchanged from the previous day which was the highest since early March, SteelHome data showed.
"I think the recent price rise was reasonable. Iron ore has found a bottom at around $55-$60, but there are risks to the upside with the Chinese economy facing problems," the Rizhao trader said. He declined to be identified as he was not authorised to speak with media.
Profit growth at China's industrial firms slowed for the fifth consecutive month in September as sales of raw materials and manufactured goods further ebbed, pointing to cooling domestic demand in the world's second-biggest economy. Also on Monday, the most-active rebar on the Shanghai Futures Exchange slipped 1.6 percent to 4,150 yuan a tonne. Coking coal fell 2.1 percent to 1,388 yuan and coke slid 3.3 percent to 2,371 yuan.