SINGAPORE: Iron ore futures firmed on Monday as China registered destocking from relatively high portside inventory levels, indicating steady demand for the feedstock, with stable hot metal output and rebounding oil supporting prices.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) traded 0.58percent higher at 782 yuan (USD114.66) a metric ton, as of 0325 GMT.
The benchmark May iron ore on the Singapore Exchange was 0.38percent higher at USD106.2 a ton. Iron ore inventory at major Chinese ports declined by 0.65percent, data from consultancy Steelhome showed, but portside iron ore stocks are still above seasonal norms, according to a note from DBX Commodities.
The average daily hot metal output of 247 steel mills was 2.395 million tons, up 0.12 million tons from the previous week, data from consultancy Mysteel showed.
In addition, both blast furnace operating and capacity utilization rates edged up week-on-week, Mysteel data showed. Inventory destocking, coupled with end-use steel demand having room to grow along with moderate steel mill profits indicate cost support for iron ore, according to a note by Shanghai Metals Markets.
Oil prices rebounded on Monday, after tumbling on Friday on news the Strait of Hormuz is closed again after both the US and Iran said the other party had violated their ceasefire deal by attacking ships over the weekend.
Firm oil prices have kept freight costs high, and supported iron ore prices in tandem. Other steelmaking ingredients on the DCE jumped, with coking coal and coke up 2.89percent and 2.24percent, respectively, rising in tandem with energy costs.
Steel benchmarks on the Shanghai Futures Exchange mostly advanced. Rebar gained 0.83percent, hot-rolled coil lifted 0.81percent, wire rod added 0.15percent, while stainless steel lost 0.23percent.
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