BEIJING: Iron ore futures extended gains on Thursday, aided by improved steel margins and the expectation of feedstocks replenishment among steel mills in top consumer China.
The most-traded iron ore contract on China’s Dalian Commodity Exchange (DCE) rose for a third straight session, up 1.11 percent at 773.5 yuan (USD109.83) a metric ton, as of 0233 GMT. It hit 781.5 yuan - highest since December 8 - earlier in the session. The benchmark January iron ore on the Singapore Exchange extended rise to a fourth consecutive session, climbing 0.48percent to USD104.15 a ton as of 0223 GMT. It touched its highest since November 27 at USD104.55 earlier in the day.
Profitability among some mills improved, thanks to the steep falls in coal and coke prices last week, said analysts. “Some mills may ramp up supply by the end of this month, driven by improved margins, although hot metal output will continue to drop this week,” analysts at Galaxy Futures said.
Hot metal output, a blast furnace product, is typically used to gauge iron ore demand. Meanwhile, Chinese steel mills, with low in-plant inventory, will initiate a flurry of purchasing to restock raw materials, including iron ore, to meet production needs during the Lunar New Year holiday, which falls in February.
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