MANILA: Dalian and Singapore iron ore futures swung between losses and gains on Tuesday after touching four-week peaks in the previous session, as prospects of further steel production cuts in China kept traders cautious.
Rebounding steel margins in China, the world’s biggest steel producer, lent some support to the steelmaking ingredient, however.
The most-traded iron ore, for September delivery, on China’s Dalian Commodity Exchange ended volatile morning trade up 0.3% at 798 yuan ($117.88) a tonne. It hit its highest since June 30 at 817.50 yuan in the previous session.
“The recovery in mills’ margins has spurred hopes that (raising) production capacity may resume more quickly than expected,” said Daniel Hynes, a senior commodity strategist at ANZ.
Improved profitability has reportedly prompted Chinese mills to restart some blast furnaces, among dozens of such production facilities idled as weak demand in recent weeks had squeezed margins.
On the Singapore Exchange, the benchmark September contract slipped 0.7% to $114 a tonne after touching a four-week peak of $120.95 on Monday.
China’s state planning agency, the National Development and Reform Council, and industry group China Iron & Steel
Association (CISA) met last week mandating further crude steel production cuts for the second half of 2022, according to
He Wenbo, CISA executive chairman, had told a recent conference that the steel industry’s production capacity must be
adjusted, ANZ’s Hynes said. China aims to cut annual steel production for a second straight year to curb emissions. First-half output was down 6.5% from the same period last year.
Overall market sentiment was also dampened as escalating
Sino-U.S. tensions rattled financial markets. Rebar on the Shanghai Futures Exchange fell 1.1%, while hot-rolled coil shed 1.3%. Stainless steel edged up 0.2%.
Dalian coking coal climbed 0.7%, rising for a fifth session, but coke slipped 0.1% after a four-session rally.