China iron ore bounces back from 4-day slump on stockpiling

MANILA: Iron ore futures in China rebounded on Monday after a four-session slump, bolstered by stockpiling demand ahead of Labour Day holidays beginning May 1, while steel prices edged higher as concerns persist over production curbs.

The most-traded September 2019 iron ore contract on the Dalian Commodity Exchange climbed as much as 2.3 percent to 634 yuan ($94.22) a tonne.

Spot iron ore for delivery to China, with 62 percent fines, was at $93.80 a tonne, based on the latest data from SteelHome consultancy.

"For the moment, demand (for the steelmaking feedstock) is still quite good so we will likely see prices stable or a bit higher," a Shanghai-based trader said.

The market will be closed on Wednesday for the Labour Day holiday and will remain shut for the rest of the week. Trading will resume on Monday, May 6.

Worries about an iron-ore supply crunch may have eased in recent days, but the issue is not completely out of the picture, analysts at ANZ Research said.

"The market continues to be reminded of the medium- to long-term impact of the mine closures in Brazil," ANZ said in a note.

Citing some port data, ANZ said iron-ore shipments from top supplier Brazil rose to 4.4 million tonnes in the week ended April 19, from 3.6 million tonnes the week before.

Stocks of imported iron ore at Chinese ports, however, fell further to 136 million tonnes as of April 26, from nearly 149 million tonnes earlier this month, which were the highest level since late September 2018, data tracked by SteelHome showed.

Other steelmaking raw materials were firmer, with coking coal rising 0.2 percent to 1,354.5 yuan a tonne and coke gaining 0.8 percent to 2,047 yuan.

The most-active October 2019 construction steel rebar contract on the Shanghai Futures Exchange gained 1.2 percent to 3,777 yuan a tonne. Hot rolled coil, used in cars and home appliances, edged up 1.1 percent to 3,714 yuan.

Production restrictions provided support to steel prices, the trader said, as mills in China's top steelmaking cities - Tangshan and Handan - are required to reduce output as part of local governments' efforts to improve air quality.