Chinese iron ore futures climbed more than one percent on Friday, snapping a six-day fall, although the outlook for the steelmaking raw material remained bleak amid ample supply.
Weaker steel prices also capped gains in iron ore, with Shanghai rebar futures down for a seventh session in a row.
The most-traded iron ore on the Dalian Commodity Exchange closed up 1.9 percent at 429.50 yuan ($63) a tonne. The contract touched a six-month low of 415 yuan on Thursday and has lost more than five percent for the week so far.
“Restocking demand was also subdued with reports that several Chinese steel mills were reselling iron ore cargoes procured via long-term contracts,” Commonwealth Bank of Australia analyst Vivek Dhar said in a note.
“Elevated Chinese port stocks also weighed on prices.”
Imported iron ore at China’s ports reached 136.6 million tonnes on May 26, the highest since SteelHome consultancy began tracking the data in 2004. That is enough to build the Eiffel Tower in Paris more than 13,000 times over.
Iron ore for delivery to China’s Qingdao port fell 1.8 percent to $55.97 a tonne on Thursday, the lowest since October 2016, according to Metal Bulletin.
A brief suspension to mining at BHP’s mt Whaleback mine in Australia due to fire would do little to counter a mounting supply glut.
The spot benchmark has declined 41 percent from this year’s peak.
Also on Friday, the most-active rebar on the Shanghai Futures Exchange dropped 2.20 percent to 3,026 yuan a tonne, marking the seventh straight day of declines.
“In the long run, China’s steel demand will trend down despite short-term volatility,” Morgan Stanley analysts said in a report, citing a view by the China Iron and Steel Association.
It was a short trading week in China on account of public holidays on Monday and Tuesday.
Source: ReutersPrevious Next