SINGAPORE: Iron ore futures prices advanced on Thursday, buoyed by robust steel demand amid production curbs in top Chinese steelmaking regions.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) rose 1.3% to 781.5 yuan ($108.87) a metric ton by 0337 GMT.
The benchmark August iron ore on the Singapore Exchange was 0.66% higher at $100.6 a ton. Steel production has rebounded in China, driven by accelerating accumulation of building materials, robust manufacturing demand, and sustained strength in steel exports, broker Galaxy Futures said in a note.
Key steel producing regions Shanxi and Tangshan have started implementing output restrictions, Galaxy said.
Iron ore shipments from top suppliers Australia and Brazil have fallen after a ramp-up by the end of the past quarter, according to analysts.
Rio Tinto posted its highest second-quarter iron ore output since 2018, but shipments missed analyst forecasts and reached their lowest level for the half since 2014 due to weather-related disruptions.
Improving mill margins are starting to boost optimism around demand, ANZ analysts said in a note.
Meanwhile, BHP said costs of establishing a “green iron” industry in Australia remained too high, even as Australia and China reached an agreement this week to work together on steel supply chain decarbonisation.
Australia, which supplies 60% of China’s iron ore needs, produces lower-grade iron ore which cannot be directly processed into steel with renewable energy.
Other steelmaking ingredients on the DCE fell, with coking coal and coke down 0.66% and 0.83%, respectively.
Most steel benchmarks on the Shanghai Futures Exchange gained ground.
Rebar increased 0.26%, hot-rolled coil climbed 0.68%, wire rod rose 0.39% and stainless steel lost 0.08%.
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