Iron ore futures in China were firmer in morning trade on July 26, supported by expectations that demand for the steelmaking input in the world's top steel producer will remain strong as the nation launches more infrastructure projects.
Investors were actively trading the January 2020 iron ore contract on the Dalian Commodity Exchange, which ended the morning session up 1.8% at 746 yuan/t ($108.45/t). Attention has shifted away from the previously most-active September contract, which hit a record-high 924.50 yuan/t on July 16.
Dalian iron ore turned volatile this week as some bearish indicators have emerged, such as a rebound in port stockpiles of the raw material, after hitting the lowest levels since early 2017 this month, and rising domestic steel inventory.
Benchmark spot 62% iron ore for delivery to China stood at $116/t, as of July 25, data showed. On July 3, it had rallied to as high as $126.50/t, the highest since January 2014.
Singapore-based steel and iron ore data analytics firm Tivlon Technologies is keeping its price forecast of $150/t by October.
"We expect the launch of infrastructure projects in China to peak in the third quarter and further uplift demand for steel," it said in a note.
China's iron ore imports in July are likely to remain flat compared with June, but down 4.8% versus July 2018, according to French data firm Kpler, which tracks commodity flows.
The nation's iron ore imports in June fell to 75.18 million tonnes, their lowest since February 2016, from 83.24 million tonnes in June 2018 and May's 83.75 million tonnes, as supply declined from top miners in Australia and Brazil.
Brazilian miner Vale discharged 13.3 million tonnes of iron ore in July, up 7.18 million tonnes or 116% from June, Kpler said in a note.
However, among the Australian iron ore exporters, only Roy Hill is discharging more volumes this month, while Fortescue Metals Group, Rio Tinto and BHP are reducing July shipments to replenish their stocks after the sell-off in May and June, it said.
The most-active construction steel rebar on the Shanghai Futures Exchange, for October delivery, rose 1.1% to 3,961 yuan/t.
Hot-rolled steel, used in cars and home appliances, climbed 0.9% to 3,881 yuan/t.
Other steelmaking materials traded mixed, with Dalian coking coal down 0.5% at 1,399.50 yuan/t, while coke climbed 2.4% to 2,187.50 yuan/t.
Source:sxcoal
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