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Iron ore strengthens for second week on near-term demand relief

Iron ore futures posted a second consecutive weekly gain on Friday, buoyed by relief that steel mills in China’s top steelmaking province were yet to cut production, even as doubts linger over long-term demand.

The most-traded January iron ore on China’s Dalian Commodity Exchange DCIOcv1 was up 2.94% at 771.5 yuan ($105.87) per metric ton, rising for a seventh straight session.
On the Singapore Exchange, the benchmark September iron ore SZZFU3 extended gains and was last up 0.8% at $106.5 a ton, as of 0715 GMT.

Overnight, Singapore iron ore futures jumped as much as 5.1%, while Dalian surged up to 3.5%.

“Iron ore prices were up strongly on the back of news that steel mills in Hebei have not yet implemented production cuts,” National Australia Bank said in a note, while staying cautious on 2023 outlook as China steel production is expected to be capped at 2022 levels.

Falling exports from Australia and Brazil have squeezed iron ore inventories in China, ANZ said in a note.

Inventories of imported iron ore sintering fines held by the 64 Chinese steelmakers under Mysteel’s weekly survey had shrunk to 8.7 million metric tons by Aug. 16, down 2.1% from the previous week and 31% lower year-on-year.

Many mills have slowed iron ore buying as the likelihood of steel output controls being introduced has risen and margins on steel sales have shrunk, Mysteel Global said.

China’s top developer Evergrande 3333.HK has filed for bankruptcy protection in a U.S. Court, adding to contagion fears in the property market.

On the Shanghai Futures Exchange, the most-active rebar contract SRBcv1 lost 0.1%, hot-rolled coil SHHCcv1 rose 0.1, wire rod SWRcv1 dipped 0.1% and stainless steel SHSScv1 gained 0.7%.

Other steelmaking ingredients Dalian coking coal DJMcv1 and coke DCJcv1 soared 2.8% and 1.5%, respectively.

The U.S. Commerce Department said on Thursday it would impose preliminary anti-dumping duties on tin-plated steel imports from Canada, Germany and China.
Source: Reuters (Reporting by Carman Chew; Editing by Rashmi Aich)

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