MANILA: Chinese iron ore futures ticked higher in rangebound trade on Tuesday, as caution prevailed after the Dalian Commodity Exchange announced transaction fee hike for the benchmark contract and higher margin requirement for speculative trading.
The most-traded Dalian iron ore for September delivery ended the morning session 0.2% higher at 864.50 yuan ($135.72) a tonne, after swinging between losses and gains. It scaled a seven-month peak at 882.50 yuan on Monday.
The steelmaking ingredient’s most-active May contract on the Singapore Exchange shed 0.3% to $154.50 a tonne. Spot iron ore in China was, however, cheaper at $152.50 a tonne, as of Monday, based on SteelHome consultancy data The Chinese bourse said it would raise the transaction fee for the September iron ore contract from March 30. The margin requirement for speculative trading of May and September iron ore contracts would be raised to 15% from 12% from settlement on March 30. The bourse required all its members to “send risk alerts to the clients and intensify the prevention of market risks, so as to ensure the smooth market operation.”
Dalian iron ore has risen about 30% this year notwithstanding recent moves by Chinese authorities to curb a rally amid concerns about inflation as commodity prices soared.
Iron ore’s recent advance also came despite lockdowns in China to contain a COVID-19 surge that could further dampen growth prospects for the top steel producer and metals consumer. “Expectations of policy support in China outweighed concerns of weaker demand amid lockdowns,” ANZ commodity strategists said in a note.
Construction steel rebar on the Shanghai Futures Exchange gained 0.3%, while hot-rolled coil slipped 0.4%.
Stainless steel was down 1.9%, extending losses as prices of raw material nickel retreated from last week’s record rally. Dalian coking coal climbed 2.1% and coke rose 1.7%.
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