BEIJING: Iron ore futures prices ticked down on Friday, pressured by higher portside inventories in top consumer China, although a pick-up in demand capped losses.

Prices of the key steelmaking ingredient, however, are heading for a third weekly gain on the back of improved demand and stimulus hopes. The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended morning trade 0.62% lower at 878.5 yuan ($121.23) a metric ton, but posted a 1.3% rise week-on-week. The benchmark May iron ore on the Singapore Exchange was 0.46% lower at $117.75 a ton, as of 0405 GMT.

It has notched a 1.1% rise so far this week. The persistent rise in inventories at ports stoked caution among investors, especially as steel consumption in May is expected to slow amid rainy weather in the southern regions, said analysts.

Iron ore inventories at major ports rose 1.4% week-on-week to 147.59 million tons as of April 26, the highest since April 2022, data from consultancy Mysteel showed. “It’s a downward correction following a continuous price gain,” said Chu Xinli, a Shanghai-based analyst at China Futures.

But the fall in ore prices is limited by further improvement in demand and as investors and traders awaited for direction from a politburo meeting, expected to be held in late April. The average daily hot metal output among mills surveyed grew for a fourth straight week by 1.1% to 2.29 million tons, the highest since December 2023, according to Mysteel.

Rising ore prices, coupled with higher coke prices, undermined the cost competitiveness of the steelmaking raw material, analysts at Hongyuan Futures said in a note.

Other steelmaking ingredients on the DCE gained, with coking coal and coke up 0.36% and 0.92%, respectively. Most steel benchmarks on the Shanghai Futures Exchange were weaker. Rebar inched 0.08% lower, hot-rolled coil dipped 0.18%, wire rod fell 2.51% while stainless steel added 0.49%.—Reuters