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BEIJING: Iron ore futures prices were hemmed into a tight range on Tuesday, as investors and traders struggled to find a clear direction amid mixed market signals in top consumer China.

The country’s Ministry of Finance officials said on Monday that they would actively promote the replacement of consumer goods such as cars and home appliances, which, in theory, supports steel demand.

However, the upward momentum of steel consumption in the world’s second-largest economy, ongoing since early April, has slowed down after some southern regions were hit by earlier-than-normal rains.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended morning trade 0.23% lower at 863.5 yuan ($119.19) a metric ton.

The benchmark May iron ore on the Singapore Exchange was 0.47% lower at $115.65 a ton, as of 0335 GMT.

High stocks and thinning spot buying interest after some mills stockpiled sufficient volumes for the usage over the May Day holiday break weighed on prices of the key steelmaking ingredient, said analysts.

Iron ore futures retreat

“The supply of iron ore is currently still higher than the actual needs with the continuous pick-up in portside stocks,” analysts at Jinrui Futures said in a note.

“Expectations of a faster issuance of special bonds and the equipment upgrade, however, have yet to materialise,” they added.

Investors and traders also awaited a politburo meeting, possibly in late April, which may give clues on Beijing’s policy direction.

Other steelmaking ingredients on the DCE receded further, with coking coal and coke down 1.82% and 0.76%, respectively.

Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar and hot-rolled coil were flat, wire rod dipped 0.42% and stainless steel fell 2.07%.

“Steel consumption was suppressed in the short term as rainy weather hit southern regions, which also dented speculative buying,” analysts at Huatai Futures said in a note.

Floods swamped cities in southern China’s densely populated Pearl River Delta following record-breaking rains, sparking worries about the region’s defences against bigger deluges induced by extreme weather events.

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