Iron ore futures rose, with the Dalian benchmark contract rebounding from a seven-month low, as falling steel inventories in China spurred hopes for some replenishment-driven demand.
In Singapore, the steelmaking ingredient climbed back above the $100 mark and was on track for a weekly gain, as Brazilian miner Vale SA’s move to cut its 2022 iron ore production forecast provided additional boost.
The most-traded iron ore, for September delivery, on China’s Dalian Commodity Exchange ended daytime trade 3.6 percent up at 681 yuan ($100.68) a ton. Thursday’s close at 657.50 yuan was its weakest since Dec. 29.
Iron ore’s front-month August contract on the Singapore Exchange rose 3.5 percent to $101.35 a ton.
Inventories of rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate held by the 184 Chinese steel mills regularly surveyed by Mysteel consultancy declined at the faster pace of 6.8 percent on week to a near six-month low of 5.7 million tons over July 14-20.
Steel products held by traders decreased for a fifth consecutive week to reach a 5-1/2-month low of 21.7 million tons as of July 21, lower by 818,600 tons or 3.6 percent on week, Mysteel reported.
“Iron ore demand is expected to improve to some extent,” analysts at Sinosteel Futures said in a note, citing Mysteel’s inventory report and Vale’s latest output guidance.
Other steelmaking ingredients also rebounded, after a two-day selloff. Dalian coking coal rose 2.1 percent and coke gained 2.7 percent.
Construction steel rebar on the Shanghai Futures Exchange rose 1.4 percent, while hot-rolled coil edged up 0.7 percent. Stainless steel slumped 1.6 percent.
But with the overall steel demand outlook in China, the world’s biggest steel producer, still clouded by COVID-19 lockdowns and troubles in the property sector, iron ore could remain under pressure in the medium term, analysts said.
Author
