BEIJING: Dalian iron ore futures hit an eight-month high on Friday, driven by favourable fundamentals and optimism about future steel demand.
The most-traded May iron ore futures contract on the Dalian Commodity Exchange (DCE) traded 1.04% higher at 919 yuan ($133.10) a tonne as of 0201 GMT. On the Singapore Exchange, the benchmark April iron ore was at $126.4 a tonne, up by 0.02%.
Mills are ramping up production but their iron ore inventories are relatively low, supporting iron ore prices, said a Shanghai-based iron ore trader, who requested anonymity as he is not authorised to speak to media.
The blast furnace operational rate of 247 surveyed steel mills across China stood at 81.07% as of Mar. 3, recording a year-on-year rise of 6.35%, data from consultancy Mysteel showed. Portside iron ore inventories, however, fell by 2.23 million tonnes week-on-week to approximately 140 million tonnes, data showed.
Steel prices are not rising as much as raw material prices, leaving mills struggling to generate profits, said a Shanghai-based iron ore analyst. Rising steel output will also prevent steel margins from improving, analysts from Huatai Futures said in a note. The expectation of growing demand from steel mills supported coke prices while increasing overseas supply prospects temporarily weighed on coking coal.
Coke moved up 0.76% while coking coal inched down by 0.3%. Steel futures prices were broadly on the up. Rebar on the Shanghai Futures Exchange climbed by 0.97% to 4,260 yuan a tonne, hot-rolled coil gained 1.02%, and wire rod ticked up 0.28%. Stainless steel was flat.
Comments
Comments are closed.