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China iron ore rebounds, but set for first monthly drop in nine
[MANILA] Iron ore futures in China climbed on Friday, buoyed as some restocking demand for the steelmaking material emerged, but were on track for their first monthly decline since November 2018 as rising supply and uncertain demand prospects sparked selloffs.
The most-traded iron ore on the Dalian Commodity Exchange, for January 2020 delivery, gained as much as 2.1 per cent to 596 yuan (US$84.03) a tonne, extending the rebound after hitting its lowest in nearly three months earlier in the week.
On the Singapore Exchange, the front-month October 2019 iron ore contract was 2.2 per cent higher at US$79.33 a tonne in early trade.
Dalian iron ore is set to post a more than 20 per cent slump in August, while spot prices have pulled back from five-year peaks hit in early July, as shipments of the material from Brazil and Australia rose and domestic steel demand ebbed.
The steel glut in China, which produces half of the global supply, and a seasonal lull in demand weighed on prices of the construction and manufacturing material in recent weeks.
"The iron ore price collapse was triggered by macro events, but there were also fundamentals in the market that hinted at a correction," said Erik Hedborg, iron ore analyst at metals consultancy CRU Group in London.
Some restocking demand has emerged to support iron ore prices, as steel mills anticipate production curbs in China's top steelmaking city of Tangshan to be eased in September, and also prepare for a possible buildup in steel demand.
"Steel inventories are easing from the highs," said Darren Toh, a data scientist with steel and iron ore analytics firm Tivlon Technologies in Singapore.
"Our data steel analytics model is expecting a ramp-up of steel demand starting from the second week of September," he said.