BEIJING: Iron ore futures rose on Monday, aided by expectations of restocking by steelmakers in top consumer China, although high portside inventories and concerns about demand going into next year limited the gains.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 0.84% higher at 780 yuan ($106.87) a metric ton, after hitting its lowest level since Nov. 19 at 762.5 yuan a ton earlier in the session.
The benchmark January iron ore on the Singapore Exchange was up 1.06% at $101.7 a ton, as of 0700 GMT, after falling to $99.8, also its lowest since Nov. 19, earlier in the day.
Expectations of buying by Chinese steelmakers before the upcoming holiday break provided some support to the key steelmaking ingredient, analysts said.
“Although hot metal output has showed signs of softening, profitability among steelmakers has stabilised... steel mills continue to replenish iron ore,” analysts at Maike Futures said in a note.
“We expect mills still need to restock around 10 million tons of iron ore before the Chinese New Year (CNY) holiday break.” Chinese steelmakers usually build up stocks ahead of the CNY, which starts from Jan. 28, to meet production needs during and after the holiday break.
Average daily hot metal output fell 1.3% to 2.29 million tons in the week to Dec. 20, its lowest since early October, data from consultancy Mysteel showed.
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