China iron ore scales 5-week high on restocking demand prospects
Dalian iron ore futures climbed nearly 4% on Thursday to their highest in five weeks, extending gains in anticipation of some restocking demand for the steelmaking raw material ahead of holidays in China.
Declining iron ore shipments into China and signs of easing trade frictions between Washington and Beijing added fuel to the rally, outweighing market talks about intensified output restrictions in top steel-producing city of Tangshan.
The most-traded iron ore on the Dalian Commodity Exchange , for January 2020 delivery, rose as much as 3.9% to 681 yuan ($96.08) a tonne, its highest since Aug. 7. It ended up 3.7% at 680 yuan.
The benchmark contract logged its second consecutive gain on a weekly basis.
Financial markets in China are closed on Friday for the nation’s Mid-Autumn Festival.
Amid declining iron ore seaborne arrivals, purchases of the material may pick up due to some restocking demand of steel mills ahead of the country’s National Day celebrations in early October, said Richard Lu, senior analyst at metals consultancy CRU in Beijing.
Sentiment was buoyed by the latest news regarding the U.S.-China trade dispute, he said, with U.S. President Donald Trump on Wednesday welcoming China’s decision to exempt some U.S. anti-cancer drugs and other goods from its tariffs.
As a “gesture of good will”, Trump announced a short delay to scheduled tariff hikes on billions worth of Chinese goods.
“It will definitely strengthen market confidence and reduce the worries,” Lu said.
The bruising trade war has raised concerns about future demand for steel not only in China, the world’s top producer and consumer of the construction and manufacturing material. China is also among the biggest exporters of steel products.
* Benchmark spot 62% iron ore for delivery to China SH-CCN-IRNOR62 was steady on Wednesday at $93 a tonne, the highest since Aug. 9 this year, according to data tracked by SteelHome consultancy.
* On the Singapore Exchange, the front-month December 2019 contract for iron ore was up 1.8% at $87.24 a tonne in late trade.
* The most-active construction steel rebar contract on the Shanghai Futures Exchange rose 2.1 % to 3,549 yuan a tonne, its strongest since Aug. 5.
* Hot-rolled coil, the steel used in cars and home appliances, gained 1.5% to 3,568 yuan a tonne, its highest close in six weeks, despite weak China auto sales data.
* China’s auto sales could experience negative to low growth over the next three years, an official with the country’s top industry association said, after sales fell for a 14th consecutive month in August.
* Other steelmaking raw materials also advanced, with coking coal up 0.7% at 1,358 yuan a tonne and coke up 2.1% at 2,005 yuan.
Source: Reuters (Reporting by Enrico dela Cruz, Editing by Sherry Jacob-Phillips)