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China iron ore, coke rise on demand outlook; steel rebounds

China’s iron ore and coke prices rose on Monday on expectations of an increase in demand for both steelmaking inputs, while steel futures rebounded from three-week lows touched earlier in the session.

The most-traded September iron ore contract on the Dalian Commodity Exchange ended up 2.3% at 895 yuan ($130.22) a tonne, edging closer to its record intraday high 911.5 yuan hit on July 3.

Tight supply conditions also supported iron ore prices, with imported stocks at China’s ports hovering near the lowest level since early 2017. The port inventory fell to 115.35 million tonnes, as of July 12, from 115.6 million tonnes a week before, data compiled by SteelHome consultancy showed.

Demand for iron ore could pick up as steel mills’ stocks have dwindled, said Darren Toh, steel and iron ore data scientist at Singapore-based Tivlon Technologies.

“Our data analytics model is sensing Chinese mills’ iron ore inventory at warehouses dropping significantly over the last 10 weeks,” he said.

This indicates that steel production in China remains brisk, despite output curbs in some of the country’s steel hubs, amid “very strong” demand for the commodity for the country’s infrastructure projects, Toh said.

China’s daily crude steel output rose to record levels in June, according to Reuters calculations, even as anti-pollution restrictions pushed whole-month production slightly lower, official data showed on Monday.

Dalian coke futures climbed 2.8% to 2,167.50 yuan a tonne, after hitting 2,172.50 yuan a tonne earlier in the day, their highest in almost five weeks.

FUNDAMENTALS
* Benchmark construction steel rebar for October delivery on the Shanghai Futures Exchange closed nearly 1% higher at 4,030 yuan a tonne, after dropping 1.8% in early trade.

* Hot rolled coil, the steel used in cars and home appliances, also rebounded from earlier losses to close 1.2% higher at 3,898 yuan a tonne.

* Overall demand outlook for steel in China is clouded, however, with the country’s economic growth slowing to 6.2% in the second quarter from a year earlier, the weakest pace in at least 27 years and dampened by the trade war with the United States.

* “Although we believe Chinese stimulatory measures should support the commodity imports in (the second half), further trade tensions remain a downside risk for demand,” ANZ said in a note.

* Dalian coking coal edged down 0.1% at 1,398 yuan a tonne.

* Benchmark spot 62% iron ore for delivery to China, SH-CCN-IRNOR62 rose 0.8% to $120.50 a tonne on Friday, near the five-and-a-half-year high of $126.50 hit on July 3, according to data tracked by SteelHome consultancy.

* China will continue to enforce production restrictions in heavy industry in winter this year and will tighten its emission assessment on steel mills when granting exemptions from curbs already in place, an environment ministry official said on Saturday.
Source: Reuters (Reporting by Enrico dela Cruz, Editing by Sherry Jacob-Phillips and Subhranshu Sahu)

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