MANILA: China's iron ore futures edged lower on Wednesday after a seven-session rally to a record peak, but the pullback was mild as demand for the steelmaking feedstock is likely to remain brisk for some time in the world's top steel producer.
Steel futures also retreated slightly although their gains in recent days were not as strong as iron ore's 16 percent between March 29 and April 9.
The most traded September 2019 iron ore contract on the Dalian Commodity Exchange fell as much as 1.5 percent to 642 yuan ($95.60) a tonne.
The May 2019, contract, the most active in recent days, declined as much as 1.8 percent, having jumped to as high as 720 yuan on Tuesday, the benchmark's highest since 2013, when the futures contract was launched.
Spot iron ore for delivery to China was up 2.1 percent on Tuesday at $96 a tonne, according to SteelHome consultancy.
The most active construction steel rebar contract, with October 2019 expiry, edged down 0.6 percent to 3,735 yuan a tonne, after gaining 10 percent over the last seven sessions amid increased domestic demand. It hit its highest since September 2011 on Tuesday.
Hot rolled coil fell as much as 1.1 percent to 3,648 yuan a tonne.
Steel appetite in China typically picks up at the end of winter, with April and May seen as the peak season as construction activity resumes amid warmer temperatures.
"China's steel production is expected to remain strong," said Helen Lau, a metals and mining analyst at Argonaut Securities. "As a result, overall demand for iron ore should (also) remain strong, and ... prices should remain elevated."
Iron ore prices have been mainly supported by worries about tightening supply after the world's biggest miners in Brazil and Australia flagged lower output or shipment estimates for this year.
On Wednesday, mining giant Rio Tinto said a fire that broke out on Saturday had damaged a facility at one of its Pilbara iron ore operations in Australia, though there was no word on whether it would impact shipping of the mineral.
Rio, the world's No. 2 miner of iron ore, recently cut its 2019, outlook for iron ore shipments from Pilbara due to production disruption and damage caused by tropical cyclone Veronica.
Other steelmaking raw materials also fell, with coking coal down 2.0 percent at 1,322 yuan a tonne, while coke lost 1.8 percent to 2,027 yuan.
Comments
Comments are closed for this article.