Iron ore futures in China edged higher on Thursday as steel prices bounced back from two-week lows, but gains were capped with Chinese buyers in no rush to secure physical cargoes amid plentiful supply. The volume of imported iron ore stocked at Chinese ports reached 143.57 million tonnes last week, the most since at least 2004, according to SteelHome consultancy. The stocks have risen 29 percent this year.
The most-traded iron ore for May delivery on the Dalian Commodity Exchange closed up 1 percent at 532 yuan ($81) a tonne, but off the intraday peak of 549.50 yuan. "Some mills are buying depending on their weekly demand, there's no rush," said a trader in China's southeastern Shandong province, on the current appetite for iron ore among steel producers.
After tracking gains in iron ore futures earlier this week, spot iron ore prices have retreated from a three-month high. Iron ore for delivery to China's Qingdao port slid 1.5 percent to $72.84 a tonne on Wednesday, according to Metal Bulletin. The spot benchmark touched its highest since September 13 on Monday at $74.15.
Some physical cargoes changed hands at lower prices on Wednesday, with a sale tender by Rio Tinto for 170,000 tonnes of 61-percent grade Pilbara Blend iron ore fines sold at $71.89 per tonne, versus $72.41 on Tuesday, Metal Bulletin said. "I think $70 is quite high (for iron ore) and I don't think it will last for a long time," said the Shandong-based trader.
China has ordered industrial plants, including steel factories, across 28 cities to reduce production during winter as part of its campaign to fight pollution. The restrictions, which had affected demand for iron ore, were in place from mid-November and will stay until mid-March. The most-active rebar on the Shanghai Futures Exchange closed 1.4 percent higher at 3,853 yuan a tonne, also off the day's peak of 3,884 yuan. It hit its lowest since December 7 on Wednesday.
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