Iron Ore Benchmarks Rise on China’s Steel Production Plans
Asian iron ore futures rose on Friday, but were expected to experience a third weekly drop due to lingering price control issues.
Recent statements by China’s leading steel producer on steel production capacity reforms had raised concerns about tight supply prospects, pushing prices to record highs earlier this month.
Soaring prices had led to strong margins, encouraging steel producers to increase their production and purchases of iron ore.
In China’s Dalian Commodity Exchange, DCIOcv1 iron ore for September delivery closed day trade up 4.1% to 1,063 yuan ($ 166.79) per tonne. The most traded contract, however, has fallen more than 5% so far this week.
On Singapore Stock Exchange SZZFM1, June iron ore was up 1.1% to $ 185 per tonne at 0709 GMT.
Commodities markets have seen a marked increase in volatility since Chinese Premier Li Keqiang reiterated the importance of controlling overheated prices at a recent cabinet meeting, analysts at JP Morgan said in a statement. note.
“The government’s record in tackling high commodity prices has had mixed results, especially when supply is constrained by strict environmental controls,” they said.
Steel prices are expected to slow in the current quarter with slowing demand, but could pick up in the third quarter “as the story of structural demand growth remains intact on healthy real estate data and investments in fixed assets, ”said JP Morgan.
The spot price of the benchmark 62% iron ore, which hit a record $ 232.50 a tonne on May 12, fell and traded to $ 191.50 on Thursday, according to data from the firm of SteelHome advice.
Steel for October deliveries rose, building materials rebar on the Shanghai Futures Exchange SRBcv1 up 4.1%, while hot-rolled coils climbed 4.9%.
Stainless steel gained 3.5%.
Dalian DJMcv1 coking coal rose 2.2% and DCJcv1 coke jumped 2.5%.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Ramakrishnan M. and Alexander Smith)