Iron ore heads for weekly gain on steady demand, lower inventories

BEIJING: Prices of iron ore futures traded in a narrow range on Friday, but were set for a weekly gain, supported by steady demand from top consumer China and falling inventories.

The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) was up 0.51percent at 785.5 yuan (USD109.82) a metric ton, as of 0150 GMT. The contract has gained 2.1 percent so far this week.

The benchmark October iron ore on the Singapore Exchange was down 0.58percent at USD103.5 a ton, as of 0143 GMT, but has climbed nearly 3percent so far this week.

Demand for the key steelmaking ingredient stood firm despite production restrictions in Tangshan, China’s top steelmaking hub, to ensure better air quality for the military parade on September 3 to commemorate the end of World War Two.

Average daily hot metal output, a key indicator of iron ore demand, dipped by 0.3 percent week-on-week to 2.4 million tons, as of August 28, but remained 8.7 percent higher than the same period last year, according to data from consultancy Mysteel.

But two analysts cautioned that output is likely to fall more steeply next week as the impact of the latest round of production controls takes hold, potentially putting downward pressure on prices.

A drop in portside stocks, which slid by 0.4 percent from the prior week as per Mysteel data, also supported ore prices.

Other steelmaking ingredients coking coal and coke dipped 0.09 percent and 0.54 percent, respectively.

Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar fell 0.22 percent, wire rod added 0.18 percent while hot-rolled coil and stainless steel were flat.