MANILA: Iron ore futures gained on Wednesday, with Dalian contracts rising for a fifth straight session and the Singapore benchmark recouping early losses, as optimism around steel demand prospects in China underpinned prices. The Dalian Commodity Exchange's most-traded iron ore contract for January 2021 delivery ended up 0.9% at 857 yuan ($123.84) a tonne.
Iron ore's September contract on the Singapore Exchange edged higher by 0.5% to $123.30 a tonne in afternoon trade. Mills in China, the world's top metals producer and consumer, continued to ramp up crude steel output, churning out a record volume in July as demand boomed particularly in the construction sector.
Their appetite for the steelmaking ingredient has helped boost spot prices, with the benchmark 62% material at $123 a tonne on Tuesday, the highest since July last year, based on SteelHome consultancy data. "With steel margins in (China) remaining healthy, iron ore demand from mills in the country is likely to remain strong," commodity strategists at ING wrote in a note.
But a pullback in prices looks overdue, some analysts said. "Uncertainties over Brazilian supply in recent months have also been supportive of the market, but as these uncertainties subside, we would expect prices to ease," ING strategists said.
Vessels carrying 14.81 million tonnes of iron ore arrived at major Chinese ports last week, based on estimates by data provider SMM, up 2.16 million tonnes from the prior week. Iron ore cargoes that left Australia and Brazil in the same week also increased, SMM reported.
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