Iron ore rebounds but struggles below US$100/T on weak China demand
FILE PHOTO: A man walks by an iron ore blending site at Dalian Port, Liaoning province, China September 21, 2018. REUTERS/Muyu Xu
(Corrects comparative figures in sixth paragraph)
By Enrico Dela Cruz
:Iron ore futures eked out gains in volatile trade on Monday following a string of losses, but benchmark prices struggled under US$100 a tonne due to weak Chinese demand and swelling portside inventory of the steelmaking raw material.
The most-traded January iron ore on China's Dalian Commodity Exchange ended daytime trading 1.4per cent higher at 570.50 yuan (US$89.17) a tonne, after a seven-session sell-off.
Iron ore's December contract on the Singapore Exchange was up 0.5per cent at US$91.95 a tonne by 0705 GMT, after falling 2.2per cent to US$89.45 earlier in the day.
From a record US$232.50 a tonne in May, the spot price of benchmark 62per cent-grade Australian iron ore for delivery to China had sunk more than 140per cent as Chinese demand collapsed, trading at US$94.50 on Friday, the lowest since May 2020, according to SteelHome consultancy data.
Imported iron ore stocked at Chinese ports, which stood at a 31-month high of 145.10 million tonnes last week, based on SteelHome data, added to the downward pressure on prices.
Atilla Widnell, managing director at Singapore-based Navigate Commodities, said he had updated his short-term target price to US$97.92-US$101.16 a tonne CFR China, from an earlier range of US$91.18-US$101.24, as iron ore looked oversold.
Shipments from Australia and Brazil plunged last week by about 4.5 million tonnes compared with the prior week, based on Navigate's estimate.
"The material decrease in Australian shipments may be an indication that output from high marginal cost producers could now be feeling the pinch from relatively low iron ore prices," Widnell said.
Overall sentiment improved after after data showed top steel producer China's export growth https://www.reuters.com/article/china-economy-trade-idUSKBN2HS024 slowed in October but beat forecasts, as global demand improved.
Construction steel rebar on the Shanghai Futures Exchange jumped 2.6per cent, while hot-rolled coil gained 0.4per cent. Stainless steel was virtually flat.
Dalian coking coal advanced 0.5per cent and coke climbed 1.7per cent.
(Reporting by Enrico Dela Cruz in Manila; Editing by Rashmi Aich and Shailesh Kuber)
