Tuesday, 08 September 2015 18:07
SHANGHAI: Chinese iron ore futures reversed earlier losses to end higher on Tuesday as steel mills stepped up buying of the raw material to ramp up production, lifting spot prices.
The most-traded January iron ore contract on the Dalian Commodity Exchange closed up 0.65 percent at 388.5 yuan ($ 61.03) a tonne, off a one-week low of 378.5 reached earlier in the session.
Chinese steel mills are expected to resume production this week after curbing operations as Beijing held a parade for the 70th anniversary of the end of World War Two.
“Buying is picking up at higher prices than the index (of the monthly average),” said an iron ore trader in Shanghai.
Iron ore for immediate delivery to China’s Tianjin port rebounded 1.8 percent to $ 56 a tonne on Monday, according to the Steel Index.
However, a stumbling economy is expected to continue putting pressure on industrial metals. A recovery in steel production in the world’s top producer could also be offset by weak demand.
“Some mills will recover output along with construction activity, (but) the domestic economy still faces downward pressure, while the volatility in global financial markets persists, denting sentiment,” said Qiu Yuecheng, analyst with steel trading platform Xiben New Line E-Commerce in Shanghai.
Qiu expects steel prices to remain weak, putting further pressure on iron ore.
Chinese iron ore imports fell 14 percent in August from the previous month, customs data showed on Tuesday, as persistent weakness in steel demand forced mills to cut back on imports of the raw material.
Faltering domestic demand and higher global prices have also boosted Chinese steel exports by 26.5 percent to 71.87 million tonnes for January-August from a year ago, customs data showed.
The most-traded January rebar futures on the Shanghai Futures Exchange was 1.25 percent higher at 1,949 yuan a tonne by close.