MANILA: Iron ore futures extended their rebound on Tuesday as easing worries about a banking sector turmoil lifted steel price benchmarks in Shanghai, though lingering concerns about demand prospects in top steel producer China limited gains. The declining Chinese portside inventory of iron also provided support to the steelmaking ingredient, which hit oversold levels last week amid concerns particularly about a drop in construction steel demand.
The most-traded May iron ore on China’s Dalian Commodity Exchange ended morning trade 1.7% higher at 881.50 yuan ($128.13) a tonne. It climbed 1.3% in the previous session, snapping a seven-session slump.
On the Singapore Exchange, benchmark April iron ore was up 1.1% at $121.85 a tonne, as of 0520 GMT. Regional US lender First Citizens BancShares scooped up assets of failed US lender Silicon Valley Bank on Monday, triggering a relief rally in financial markets fearing a deeper banking sector turmoil.
Analysts, however, said worries about a global credit crunch that could curb economic growth and metals demand, along with steel mills’ low-inventory strategy, production restrictions and regulatory risks in China, will likely keep iron ore gains in check.
A weak property market in China, a major demand driver for steel, is also expected to keep sentiment subdued, they said.