SINGAPORE: Iron ore futures were set for a second consecutive weekly gain on Friday, buoyed by relief that steel mills in China’s top steelmaking province have yet to cut production, even as doubts linger over long-term demand.
The most-traded January iron ore on China’s Dalian Commodity Exchange was up 2.6% at 769 yuan ($105.58) per metric ton, as of 0330 GMT, rising for a seventh straight session.
On the Singapore Exchange, the benchmark September iron ore extended gains and was last up 0.6% at $106.3 a metric ton. Overnight, Singapore iron ore futures jumped as much as 5.1%, while Dalian surged up to 3.5%.
“Iron ore prices were up strongly on the back of news that steel mills in Hebei have not yet implemented production cuts,” National Australia Bank said in a note, while staying cautious on 2023 outlook as China steel production is expected to be capped at 2022 levels.
Falling exports from Australia and Brazil have squeezed iron ore inventories in China, ANZ said in a note. Inventories of imported iron ore sintering fines held by the 64 Chinese steelmakers under Mysteel’s weekly survey had shrunk to 8.7 million metric tons by Aug 16, down 2.1% from the previous week and 31% lower year-on-year.
Many mills have slowed iron ore buying as the likelihood of steel output controls being introduced has risen and margins on steel sales have shrunk, Mysteel Global said.
Meanwhile, contagion fears in China’s property market continued to weigh. Most steel benchmarks on the Shanghai Futures Exchange rose. The most-active rebar contract rose 0.3%, hot-rolled coil were relatively unchanged, wire rod strengthened 0.1%, and stainless steel gained 0.9%. Other steelmaking ingredients Dalian coking coal and coke soared 2.7% and 2%, respectively.
The US Commerce Department said on Thursday it would impose preliminary anti-dumping duties on tin-plated steel imports from Canada, Germany and China.
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