SINGAPORE: Iron ore prices rebounded on Wednesday, supported by short-covering and expectations that steelmakers in top consumer China will begin restocking ahead of the Lunar New Year holiday.
The most-traded iron ore contract on China’s Dalian Commodity Exchange (DCE) climbed 1.27 percent to 680 yuan (USD101.95) a metric ton by 0200 GMT after a 0.7 percent fall on Tuesday.
It earlier touched its highest since October 29 at 682.5 yuan. The benchmark December iron ore on the Singapore Exchange was 0.88percent higher at USD91.5 a ton, as of 0150 GMT.
Steel mills are expected to replenish ore inventories before the Lunar New Year holiday, providing near-term support to prices, analysts at Guoxin Futures said in a note.
Chinese steelmakers typically build seaborne iron ore stocks in the fourth quarter to meet production needs during the week-long holiday period, which falls in February next year.
“Iron ore fundamentals remained weak, but a level at around USD90 a ton created a strong technical support, limiting further downside room,” said Jiang Mengtian, an analyst at consultancy Horizon Insights.
While seaborne ore supply is expected to increase in the fourth quarter, analysts at Macquarie said, “lower domestic iron ore output in China has partly offset the impact”.
Coking coal and coke, other steelmaking ingredients, extended losses on rising supply and subdued demand, down 1.26 percent and 0.78 percent, respectively.