BEIJING: Dalian iron ore futures inched higher on Tuesday, building on the previous session’s rally, although profit-booking amid a narrowing basis limited the gains.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) was up 0.45percent at 784.5 yuan (USD110.38) a metric ton, as of 0201 GMT, after rising nearly 2percent on Monday. The benchmark December iron ore on the Singapore Exchange was 0.42percent lower at USD103.95 a ton, as of 0151 GMT, following a gain of more than 1percent the day before.
“Spot liquidity was quite lukewarm, weighing on sentiment,” a Singapore-based trader said on condition of anonymity as he is not authorised to speak to media. Transaction volumes for seaborne cargoes and portside cargoes slid by 25.8percent and 24.3percent from the previous session, respectively, on Monday, data from consultancy Mysteel showed.
Higher prices dented mills’ buying appetite, as industrial participants remained bearish about the price trend amid rising inventories and expectations of seasonally weakening steel demand, said a Shanghai-based analyst. Also, the upside momentum receded due to a narrowing basis, the difference between spot and futures prices, the Singapore-based trader said.
The need for basis convergence, narrowing gap between spot and futures prices, lent support to futures prices, which had fallen at a more rapid pace than the spot market earlier this month.
Coking coal and coke, other steelmaking ingredients, slipped 3.48percent and 2.68 percent, respectively. Steel benchmarks on the Shanghai Futures Exchange were mixed.
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