Iron ore futures in China extended gains to a fifth straight session on Monday, underpinned further by data showing a drop in stocks of the steelmaking raw material at the country's ports, and after the central bank cut its medium-term lending rate.
China's port inventory of imported iron ore dipped to 130.65 million tonnes, as of last Friday, from 131.1 million tonnes a week earlier, SteelHome consultancy data showed. That was 9% down from 143.60 million tonnes a year ago.
The Dalian Commodity Exchange's most-traded iron ore contract ended up 2.7% at 639.50 yuan ($91.65) a tonne, near the day's peak of 640 yuan, which was its highest since January 23.
Supply concerns have also lifted spot prices, with the benchmark 62% iron-content ore settling at a three-week-high $88.50 a tonne on Friday, SteelHome data showed. "Iron ore prices, both futures and spot prices, are supported by a decrease in iron ore inventory, signs of supply tightness and the positive outlook," said Helen Lau, analyst at Argonaut Securities in Hong Kong.
Recent bad weather had caused delays in iron ore shipments from Australia and Brazil, while cargo unloading has also been hampered by quarantine requirements at ports, she added. Lau also saw further support to iron ore prices from expectations of additional economic stimulus measures from Beijing.
On Monday, China's central bank cut the interest rate on its medium-term lending, seeking to ease the drag to the businesses from a coronavirus outbreak that has severely disrupted activity.
Keeping iron ore's gains in check, however, China's downstream steel demand is widely expected to remain weak for some time as the epidemic, which has now killed more than 1,700 people, shows no sign of easing. China's steel inventory has risen sharply over the last eight weeks as demand remained sluggish, with construction steel rebar shooting up 140% and hot-rolled coil, used in cars and home appliances, climbing 55%, according to SteelHome data.
A survey by Chinese steel industry data provider Mysteel showed that among 87 steelmakers that operate electric arc furnaces, only 19 had resumed operations as of last Wednesday after the Lunar New Year holidays.
Comments
Comments are closed for this article.