MANILA: Chinese iron ore futures rose on Monday along with prices of other steelmaking raw materials, buoyed by expectations that supply will remain limited as stocks at the country's ports shrank further, while demand could pick up again.
The most-actively traded iron ore contract on the Dalian Commodity Exchange gained as much as 2pc to 721 yuan ($104.00) a tonne in morning trade, pulling away from a three-week low hit on Thursday.
Iron ore inventory at Chinese ports hit 121.6 million tonnes as of last week, steadily falling in the last four weeks from a peak this year at close to 150 million tonnes.
While China's iron ore imports rebounded in May from an 18-month-low in April, last month's shipment was still well down on the same month last year as disruptions to output in Brazil and Australia hampered shipments.
The world's biggest iron ore consumer brought in 83.75 million tonnes of iron ore last month, up 3.7pc from April but down 11pc from May 2018, data from the country's General Administration of Customs showed on Monday.
For the first five months of the year, China imported 423.92 million tonnes of iron ore, down 5.2pc on the same period in 2018, customs data showed.
Iron ore cargoes from Brazilian miner Vale SA, one of China's biggest suppliers, have been cut following a fatal tailings dam collapse in January that had prompted more dam and mine closures in Brazil.
Amid the supply crunch, demand for iron ore could pick up again in the coming weeks, according to Singapore-based steel and iron ore data analytics company Tivlon Technologies.
Tivlon's analysis "is suggesting further upside in the ferrous complex," said Tivlon data scientist Darren Toh, adding that China's infrastructure projects will continue to support demand for iron ore.
Iron ore's spot price could hit $120 a tonne by August, he said. The 62pc grade iron ore for delivery to China was at $97 a tonne as of June 6.
Other steelmaking ingredients were firmer, with coking coal up as much as 1.5pc at 1,397 yuan a tonne, while coke rose as much as 1.7pc to 2,147.5 yuan.
Steel futures, however, extended their losses as the peak demand season has passed, while supply remains plentiful after mills ramped up production in recent weeks.
The most-actively traded rebar contract on the Shanghai Futures Exchange was down as much as 0.5pc at 3,693 yuan a tonne. Hot-rolled coil edged down 0.5pc to 3,553 yuan.
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