Dalian iron ore futures held steady on Monday as China's falling portside stockpiles of the steelmaking raw material supported prices,despite fears of a potential second wave of coronavirus infections locally and signs of weakening domestic steel demand.
The Dalian Commodity Exchange's most-traded September iron ore ended flat at 762.50 yuan ($107.51) a tonne, erasing early gains. Iron ore on the Singapore Exchange, however, fell 2.1% to $100.03 in afternoon trade.
Imported iron ore stocked at China's ports dropped to 107.75 million tonnes last week, the lowest since October 2016, SteelHome consultancy data showed.
The further decline in portside inventory showed Chinese steel mills' strong demand for iron ore as they ramped up production, with crude steel output rising 8.5% in May from a month earlier and up 1.9% in January-May from a year earlier.
But latest weekly data showed that destocking of steel products has slowed, Sinosteel Futures Co Ltd analysts wrote in a note.
“In the short term, the output may remain high, and small growth may still occur, but the probability of a substantial increase in production is weak when demand is weak,” they said.
While Dalian iron ore held firm after six straight weekly gains, worries of a resurgence of coronavirus infections in China dampened overall market sentiment, pulling steel futures down.
Beijing has recorded dozens of new cases in recent days, prompting the capital to take steps to try to halt the outbreak including ramping up testing.
FUNDAMENTALS
* Construction steel rebar on the Shanghai Futures Exchange slipped 0.7%, while hot-rolled coil dipped 0.5% and stainless steel lost 1.3%.
* Coking coal slumped 1.7% and coke dropped 0.7%.
* Benchmark spot 62% iron ore settled at $105 a tonne on Friday, hovering near a 10-month high, SteelHome data showed. SH-CCN-IRNOR62
Source:Reuters
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