BEIJING: Iron ore futures rebounded on Wednesday, supported by lingering low inventories and expectations of a flurry of buying for winter restocking, although falling demand due to growing equipment maintenance among mills capped gains.
The most-traded May iron ore on China’s Dalian Commodity Exchange (DCE) climbed 1.35% to 938 yuan ($131.49) a metric ton, as of 0210 GMT.
The benchmark January iron ore on the Singapore Exchange was up 1.31% at $134.05 a ton, as of 0246 GMT.
Prices of the front month contracts gained support as it approached to settlement for the January delivery cargoes while traders faced limits in trading volumes, analysts at Sinosteel said in a note.
Iron ore futures move sideways on China’s mixed signals
The state-backed bourse set a limit on daily trading volumes for iron ore futures at no more than 500 lots on contracts for January to May 2024 delivery.
The rebound in ore prices came despite some cities in north China starting another round of emergence response from Tuesday amid the forecast of heavy pollution, which typically requires local mills to restrict production.
However, continuously falling demand is expected to act as a headwind for prices of the key steelmaking ingredient, said analysts.
“We expect hot metal output to fall further next week as more mills began maintenance on furnaces amid shrinking margins,” analysts at Galaxy Futures said in a note. Other steelmaking ingredients also gained ground, with coking coal and coke on the DCE up 1.01% and 0.24%, respectively.
Steel benchmarks on the Shanghai Futures Exchange ticked up amid higher raw materials prices while lackluster buying interest from traders capped gains.
Rebar edged up 0.26%, hot-rolled coil added 0.35%, wire rod gained 0.17% and stainless steel advanced 0.66%.
“Some steel mills have unveiled policies and prices for winter restocking, with the higher-than-expected prices curbing traders appetite for buying,” Galaxy’s analysts added.
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