BEIJING: Chinese iron ore futures logged on Thursday their fifth session of gains to scale over six-week highs, as steel mills replenish inventories ahead of holidays and ramp up production with the virus-hit economy recovering gradually.
“Global (iron ore) shipments are relatively stable and the demand-side is improving,” analysts with Galaxy Futures said. Galaxy Futures noted that steelmakers would suffer bigger losses if production gets suspended, hence, they are still churning out products and restocking iron ore inventories ahead of the holidays.
Portside iron ore inventories in China fell to the lowest level in more than eight months in end-May, data from SteelHome consultancy showed. Benchmark iron ore futures on the Dalian Commodity Exchange, for September delivery, jumped as much as 2.2% to 921 yuan ($137.40) a tonne, the highest since April 19. Coking coal futures on the Dalian bourse inched 0.2% higher to 2,742 yuan a tonne and coke prices rose 1% to 3,582 yuan per tonne.
Steel prices on the Shanghai Futures Exchange were traded range-bound. “End-consumption is the core to affect recent steel prices,” SinoSteel Futures said in a note, adding that seasonal demand this year is worse in spring while rains and heat in summer could dent construction activities. But China’s decision to beef up measures to support its ailing economy and markets is expected to lift prices of industrial metals.
Construction-used rebar for October delivery stood at 4,694 yuan a tonne, flat from the previous session. Hot-rolled coils, used in cars and home appliances, edged up 0.1% to 4,803 yuan per tonne, and Shanghai stainless steel increased 0.6% to 18,425 yuan a tonne. China’s markets will be closed on June 3 for the Dragon Boat Festival.