Iron ore futures in Asia rose on Monday, supported by a steady decline in portside stockpiles of the steelmaking ingredient in China, the world’s top steel producer.
The most-traded September iron ore on China’s Dalian Commodity Exchange ended daytime trading 2.1% higher at 1,196 yuan ($185.31) a tonne, up for a fourth consecutive session. It earlier rose to 1,209.50 yuan, its strongest level since June 21.
The most-active July iron ore on the Singapore Exchange advanced 0.8% to $213.35 a tonne by 0716 GMT.
Imported iron ore stocked at Chinese ports dropped for a fourth straight week to 123.95 million tonnes, as of Friday, hitting the lowest level since early October, data from SteelHome consultancy showed.
Although iron ore purchases by Chinese steel mills have slowed down due to seasonally weak construction and manufacturing activities, declining port inventories have added to the lingering supply concerns.
“Weekly Australian iron ore shipments have been disappointing through June, creating a tighter global supply-demand balance – not to mention the revolving door of incidents in Brazil,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.
Australia and Brazil are the world’s biggest producers of iron ore. Brazil’s supply remains suppressed by operational restrictions on mines due to safety concerns.
Spot iron ore prices in China have stayed above $200 a tonne over the last four weeks, despite efforts by Chinese authorities to cool what they see as an overheated market.
While SGX iron ore dropped to $195.05 a tonne last week, that level offered “a massive buying opportunity with very little indicating that physical iron ore market fundamentals had actually loosened to keep prices that low”, Widnell said.
Construction steel rebar on the Shanghai Futures Exchange rose 1% and hot rolled coil advanced 1.1%. Stainless steel slipped 0.6%.
Dalian coking coal slumped 3.8% and coke lost 4%, after three straight sessions of gains.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Subhranshu Sahu and Amy Caren Daniel)