Iron ore futures near 6-month high on low stocks, pre-holiday restocking
IRON ore futures rose for a fourth straight session on Thursday (Sep 14), helped by low inventories and pre-holiday restocking, although concerns about lingering steel market weakness in the peak construction season capped gains.
The most-traded January iron ore on China’s Dalian Commodity Exchange (DCE) ended daytime trading 0.82 per cent higher at US$118.68 a metric ton.
The benchmark October iron ore on the Singapore Exchange gained 0.78 per cent to US$120.35 a ton, as of 0702 GMT, the highest level since March 17.
“Solid demand for raw materials from blast-furnace-based steelmakers, expectations of a wave of pre-holiday restocking, coupled with low inventories, supported (iron ore) prices,” analysts at Sinosteel Futures said in a note.
Iron ore shipments from suppliers have been steadily increasing, but consumption outside of China is expected to recover quickly, which will likely reduce some supply to China, analysts at Galaxy Futures said in a note.
Analysts at National Australia Bank said they continued to see downside risks to iron ore prices without further stimulus in China.
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Other steelmaking ingredients strengthened, with coking coal and coke on the DCE rising 2.93 per cent and 1.56 per cent, respectively.
Most steel benchmarks on the Shanghai Futures Exchange climbed on higher raw materials prices and continuously falling stocks, but gains remained marginal amid lack of clear signs of improvement in downstream demand.
Rebar added 0.56 per cent, hot-rolled coil advanced 0.31 per cent, stainless steel grew 0.29 per cent, while wire rod lost 0.32 per cent.
Total stocks of five major steel products declined by 2.3 per cent on the week to 15.79 million tons in the week to Sept 14, data from consultancy Mysteel showed.
“It’s expected that demand increase from the property sector in the peak construction season will be relatively limited, given that it will take time for the stimulus measures to be eventually permeated through into the new starts (which generates most steel demand),” said Sinosteel analysts. REUTERS
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