Dalian iron ore drifts lower as trading in China resumes
- The benchmark March iron ore on the Singapore Exchange was 0.89% higher at $96.7 a ton
SINGAPORE: Dalian iron ore futures drifted lower on Tuesday in reaction to the fall in Singapore iron ore prices over the Lunar New Year holiday, though a recovery in production and falling shipments are expected to support prices.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) traded 1.19% lower at 745 yuan ($108.03) a metric ton, as of 0319 GMT.
The benchmark March iron ore on the Singapore Exchange was 0.89% higher at $96.7 a ton.
Trading on the DCE and SHFE halted between February 16 and February 23 for the Lunar New Year holiday, while the Singapore Exchange continued trading, during which the benchmark Singapore iron ore contract fell 1.42% last week.
As a result, Dalian iron ore prices are falling in tandem with the change in Singapore iron ore prices last week, said Atilla Widnell, managing director at Navigate Commodities.
In contrast, Monday’s uptick in Singapore iron ore prices reflects Chinese liquidity returning to the market.
“While the return of Chinese liquidity post-Lunar New Year has certainly played its part, the market is responding positively to blast furnace ramp-ups across China,” he added.
In addition, iron ore arrivals at 47 Chinese ports declined by 1.7 million tons week-on-week, according to data from Mysteel, providing support for prices. Market transactions are expected to gradually increase, and spot prices are expected to remain firm as downstream steel demand is expected to recover, a note from the Shanghai Metals Market said.
Other steelmaking ingredients on the DCE fell, with coking coal and coke down 1.52% and 2.18%, respectively. Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar lost 0.75% and hot-rolled coil shed 0.71%.
Meanwhile, wire rod gained 0.51% and stainless steel firmed 0.51%.