BEIJING- Iron ore futures prices retreated on Friday, but were on track for a second straight weekly gain on improving demand in top consumer China.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended morning trade 1.54 percent lower at 860.5 yuan ($118.83) a metric ton.
However, it was on track for a 4 percent rise for the week.
The benchmark May iron ore on the Singapore Exchange was 1.59 percent lower at $114.7 a ton, but up 3.3 percent so far this week.
“It’s normal to see ore prices consolidate after recording significant gains over the past two weeks, with some traders liquidating parts of long positions to lock in profits,” said Pei Hao, a Shanghai-based analyst at international brokerage Freight Investor Services (FIS).
Average daily hot metal output among steel mills surveyed climbed for a third straight week, up 0.7 percent week-on-week to 2.26 million tons as of April 19, while profitability rose to 48.48 percent from 38 percent , data from consultancy Mysteel showed.
But a more than 13 percent price gain so far this month sparked fears that the state planner may step in as previously to rein in the rally.
“A more significant rise in prices of raw materials than steel will squeeze margins among mills, denting their buying appetite for raw materials including iron ore, thus weighing down corresponding prices as well,” FIS’s Pei added.
