Iron ore set for third weekly gain on improved China demand, supply woes

BEIJING: Iron ore futures were range-bound on Friday, and set to gain for a third straight week, aided by improving demand in top consumer China and supply concerns over Guinea-based projects, although higher ore and steel inventories capped gains.

The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) closed daytime trade 0.06 percent lower at 799.5 yuan (USD112.29) a metric ton.

The contract posted a weekly gain of 1.6 percent.

The benchmark October iron ore on the Singapore Exchange added 0.54 percent to USD106.05 a ton as of 0810 GMT, but posted a 1.2 percent rise so far this week.

The demand for iron ore rebounded as steelmakers resumed production after the military parade ended on September 3, underpinning prices.

Average daily hot metal output, a gauge of ore demand, jumped 5 percent week-on-week to a three-week high of 2.41 million tons as of September 11, data from consultancy Mysteel showed.

Earlier this week, prices gathered momentum as concerns over supply from Simandou project in Guinea mounted after reports of local government wanting Rio Tinto to build refiners locally.

This move could potentially limit the volume of ore available for export. The sharp drop in shipments from major supplier Brazil in the first week of September also boosted bullish sentiment.

However, prices pared gains from Thursday as rising steel inventories during September’s peak demand season weighed.