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Dalian iron ore falls on mounting inventory, China property worries

Dalian iron ore futures fell on Monday, amid persistent caution due to mounting port inventory and lingering property worry in top consumer China while the Singapore benchmark rebounded slightly on increased purchases.

The most-traded May iron ore contract on China’s Dalian Commodity Exchange closed daytime trade 0.63% lower, at 943 yuan ($131.02) per metric ton.

The benchmark March iron ore SZZFH4 contract on the Singapore Exchange was up 0.33% at $126.70 a ton as of 0706 GMT, erasing some earlier gains.

Mixed market signals clouded the demand outlook, with Beijing’s various stimulus efforts and an expectation of growing demand after the Lunar New Year holiday break poised to support prices.

However, the persistent pessimism amid the struggling property and stock markets in the world’s second-largest economy capped price gains.

The China Securities Regulatory Commission said in a statement on Sunday it would step up implementing market stabilisation measures, the latest pledge following a wave of measures to support its property sector and restore market confidence.

Rising inventory weighed on sentiment. Iron ore inventory across 35 ports tracked by the Shanghai Metals Market (SMM) totalled 126.26 million metric tons in the week as of Feb. 2, up 1.32% week-on-week due to more arrivals.

Most Chinese steel mills showed little interest in making purchases in the spot markets, “having conducted most of their restocking business in the previous weeks”, said Atilla Widnell, managing director at Navigate Commodities.

Steelmakers typically stockpile raw materials in the weeks ahead of a week-long holiday to meet production needs during the period.

“Ore prices are likely to consolidate within a narrow range in the coming days with the holiday break drawing closer; diminishing demand and the weakening stock market saw prices tumble last week, and a slight upward correction is not a surprise,” said Pei Hao, a Shanghai-based analyst at international brokerage FIS.

Other steelmaking ingredients Dalian coking coal DJMcv1 and coke DCJcv1 inched down 0.09% and 0.19%, respectively. Steel benchmarks on the Shanghai Futures Exchange were mixed.

Rebar SRBcv1 was little changed, hot-rolled coil SHHCcv1 ticked down 0.1%, wire rod SWRcv1 was little moved, and stainless steel SHSScv1 lost 0.37%.
Source: Reuters (Reporting by Cassandra Yap and Amy Lv; Editing by Janane Venkatraman and Mrigank Dhaniwala)

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