July 8, 2019 / 4:09 AM / 2 months ago

UPDATE 2-China iron ore recovers as focus shifts to demand outlook

* Dalian iron ore jumps as much as 2.5%

* Steelmakers call for market stability

* China’s iron ore port inventory rises

* Iron ore could hit $150/T by Oct - analyst (Adds closing prices, graphic)

By Enrico Dela Cruz

MANILA, July 8 (Reuters) - Dalian iron ore on Monday recouped some of its losses late last week, buoyed by expectations of strong demand even as latest port stocks data in China showed an easing in supply tightness for the steelmaking raw material.

Prices plummeted on Friday on news that China’s top steel companies questioned whether “non-market factors” had caused a surge in iron ore prices to record highs, and called on the government to maintain market stability.

Companies representing 30% of China’s steel output, including China Baowu Group, HBIS Group, Jiangsu Shagang Group and Ansteel Group, have formed a panel to look into the pricing of iron ore and work with futures exchanges.

The most-active September iron ore contract on the Dalian Commodity Exchange ended the session up 1.9% at 861 yuan ($124.95) a tonne, after reversing early losses and climbing as much as 2.5%. It was still down 5.5% from a record high of 911.5 yuan hit on July 3.

While there were some funds outflow following news about the investigation, iron ore remained supported because of expectations of “very strong infrastructure steel demand”, said Singapore-based steel and iron ore data analytics company Tivlon Technologies.

“The strong steel demand in China and Southeast Asia is resilient and we are expecting further upside in government projects in Q3 particularly in ASEAN countries,” said Tivlon data scientist Darren Toh.

“We continue to remain upbeat about iron ore prices in Q3 and also expect steel mill margins to improve towards the end of Q3,” Toh said, projecting a price of $150 a tonne by October.

FUNDAMENTALS

* Benchmark spot iron ore with 62% fines for delivery to China SH-CCN-IRNOR62 fell 4.1% to $117.50 a tonne on Friday following news that executives from eight of China’s biggest steel mills gathered on June 27 to discuss the surge in prices.

* The spot price, based on data tracked by SteelHome consultancy, had jumped to as high as $126.50 a tonne on July 3, its highest in about five-and-a-half years, boosting its 2019 gains to 71%.

* Analysts have attributed the rallies in spot and futures prices of iron ore mainly to concerns about tight supplies amid reduced exports from top producers Australia and Brazil, as well as robust Chinese demand.

* Iron ore stocked at China’s ports rose to 115.6 million tonnes, as of July 5, SteelHome data showed SH-TOT-IRONINV, rising for the first time in three months. Port inventory had fallen steadily since April to 115.25 million tonnes as of June 28, the lowest since early 2017.

* The most-active October construction steel rebar contract on the Shanghai Futures Exchange edged down 0.6% to 3,992 yuan a tonne. Hot-rolled coil, steel used in cars and home appliances, slipped 0.2% to 3,871 yuan.

* China’s top steelmaking province of Hebei has moved up the target dates for cutting industrial capacity and relocating plants by two months to the end of October, the provincial environmental department said.

* Other steelmaking inputs were mixed, with Dalian coking coal up 0.4% at 1,374 yuan a tonne, while coke dropped 1.1% to 2,122.50 yuan.

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($1 = 6.8905 yuan)

Reporting by Enrico dela Cruz; Editing by Sherry Jacob-Phillips and Subhranshu Sahu

Nuestros Estándares:Los principios Thomson Reuters
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