SHANGHAI: Iron ore prices rebounded on Friday after touching more than two-year lows the day before, aided by a raft of dip buying amid signs of improving steel margins and downstream consumption in top consumer China.
The most-traded iron ore contract on China’s Dalian Commodity Exchange rose 0.22 percent to 673.5 yuan (USD100.65) a metric ton, as of 0157 GMT, losing 1.3 percent so far this week.
The benchmark November iron ore on the Singapore Exchange was 0.56 percent higher at USD90.35 a ton, as of 0147 GMT. It has dropped 0.3 percent so far this week.
Market sentiment was boosted by slightly improved profitability among steel mills, propelling a flurry of dip buying that led to a temporary “technical rebound”, said analysts.
Around 8 percent of domestic steelmakers were operating at a profit as of October 15, versus 6.9 percent the week before, data from consultancy Mysteel showed.
The fall in hot metal output, a gauge of iron ore demand, slowed down, indicating that mills will need to restock feedstocks, analysts at broker First Futures said in a note.
But downside risks persisted as portside inventories built up and the demand outlook was vulnerable to remaining low profitability and a slack season ahead.
Coking coal and coke, other steelmaking ingredients, extended losses as supply recovery in major production hubs ramped up, down 1.8 percent and 0.56 percent, respectively.
Steel benchmarks on the Shanghai Futures Exchange were range-bound. Rebar ticked up 0.07 percent, hot-rolled coil nudged up 0.03 percent, while stainless steel shed 0.38 percent.