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Dalian iron ore edges higher; stainless steel shimmers

  • Signs emerge pointing to tepid Chinese steel demand.
  • China's steel exports to top buyer ASEAN countries decline.
  • Shanghai stainless steel futures scale record high.
Published July 14, 2021
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Dalian iron ore futures ticked higher in range-bound trade, while the Singapore benchmark slipped on Wednesday, pressured by concerns about demand prospects for the steelmaking raw material in top steel producer China.

The most-traded September iron ore on China's Dalian Commodity Exchange ended daytime trade 0.8% higher at 1,219.50 yuan ($188.36) a tonne.

Iron ore's most-active August contract on the Singapore Exchange was down 0.5% at $209.15 a tonne, as of 0706 GMT.

China iron ore futures easier on worries

"There are early signs of a turning point in Chinese demand with falling Chinese steel prices crushing margins for steel mills," Justin Smirk, a senior economist at Westpac in Sydney, said.

Lower cement prices in China, rebar makers possibly starting to incur losses, and excavator sales in May posting the first monthly drop since early 2020 point to slowing construction activity that has also been hampered by an unfavourable weather, Smirk said.

China's steel exports also remained weak, hit by tepid demand in Southeast Asian countries - its largest buyers of the construction and manufacturing material - due to a fresh wave of COVID-19 infections in the region, Mysteel consultancy reported.

Concerns about China's efforts to curb steel output this year to meet its carbon emissions goal also kept market participants largely at bay.

Iron ore supply constraints, meanwhile, kept spot prices underpinned, with the support particularly stronger for high-grade materials, as China's intense emission-control campaign pushed steel producers to use top-quality and environment-friendly ore.

Dalian iron ore futures jump as Tangshan mills resume production

Rebar on the Shanghai Futures Exchange rose 2.9%, while hot-rolled coil jumped 2.6%.

Shanghai stainless steel climbed as much as 4.1% to 17,965 yuan a tonne, its strongest level since trading of stainless steel contracts started on the Shanghai bourse in 2019.

High demand and low inventory in China lifted stainless steel prices, Huatai Futures analysts said in a note.

Dalian coking coal advanced 3.8% and coke gained 2.7%.

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