BEIJING: Prices of iron ore futures drifted higher on Tuesday after falling to a one-week low in the previous session, aided by hopes of a demand recovery after the end of top consumer China’s military parade.
Steelmakers in Tangshan, China’s top steel production hub, were required to implement production controls to ensure better air quality for the military parade, after which the restriction will be removed.Ore demand is likely to rebound going ahead as the impact of the big event on the hot metal output is limited in duration, analysts at Zijin Tianfeng Futures said, referring to China’s military parade on September 3 to commemorate the end of World War Two.
The benchmark October iron ore on the Singapore Exchange was up 0.69 percent at USD102.35 a metric ton, as of 0701 GMT.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 0.06 percent higher at 771.5 yuan (USD107.86) a ton.
In the near term, prices of the key steelmaking ingredient will be pressured by falling hot metal output, a gauge of iron ore demand, which is expected to decline by nearly 2 percent in the week as of September 5, versus a weekly drop of 0.3 percent previously.
Consumption for iron ore has been resilient, supported by elevated hot metal output, which is still much higher than a year earlier despite some softening in recent weeks.
Coking coal and coke, other steelmaking ingredients, dipped 0.8 percent and 0.44 percent, respectively.
Steel benchmarks on the Shanghai Futures Exchange moved sideways. Rebar lost 0.16 percent, hot-rolled coil shed 0.36 percent while wire rod added 0.34 percent and stainless steel gained 0.66 percent.
Steel prices will face further pressure in September, Jianhua Wang, an analyst at consultancy, Mysteel, said in a note on Monday, citing weak fundamentals and a persistent pick-up in steel inventories.
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