China's iron ore futures edged higher on Monday, supported by expectations firmer steel prices in the world's biggest consumer would aid demand for the raw material. Stocks of imported iron ore across China's ports fell for a second straight week last week, suggesting firm demand as buyers sought cheap cargoes. But the stockpiles are still near a record level at above 111 million tonnes and could remain a drag on spot prices that have fallen 29 percent this year.
Iron ore for January delivery on the Dalian Commodity Exchange gained 0.2 percent to 675 yuan ($109.3) a tonne by 0313 GMT, recovering from a one-week trough of 669 yuan reached earlier. "The volume of ready iron ore stock in China's ports has been decreasing and we believe the inventory at mills is also low. On the other hand, prices for steel products are also good and some mills are in profit," said an iron ore trader based in China's eastern Shandong province.
Stocks of imported iron ore in Chinese ports fell by 400,000 tonnes to 111.55 million tonnes as of August 1, according to SteelHome which tracks data at 44 ports in the country. It was the second consecutive week that the inventory has fallen, although it is not far below a record high of 113.70 million tonnes reached in early July. The most-traded rebar contract for delivery in January on the Shanghai Futures Exchange rose half a percent to 3,079 yuan a tonne, regaining ground after a three-day decline.
Benchmark 62-percent grade iron ore for immediate shipment to China dropped 0.4 percent to $95.20 a tonne on Friday, according to data compiled by Steel Index. The commodity gained 2 percent in July in its second straight monthly gain, but has struggled to bounce back to $100 after breaching that level on May 19. Plentiful supply has weighed on prices of the steelmaking raw material as low-cost miners from Australia and Brazil boosted production, hoping to edge out smaller exporters as prices dropped.
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