Iron ore futures prices seesawed on Thursday with market players weighing softening near-term demand in top consumer China and prospects of increasing supply against possible restocking by steelmakers.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) closed daytime trade 0.26% higher at 772.5 yuan ($108.45) a metric ton.
The benchmark December iron ore (SZZFZ5) on the Singapore Exchange was down 0.03% at $102.75 a ton, as of 0724 GMT.
Traders shifted their focus back to fundamentals, which are skewed to the weak side, analysts at broker Shengda Futures said in a note.
Expectations of growing supply and softening demand during the remainder of the year had pressured prices earlier in the month.
Some steelmakers increased equipment maintenance amid shrinking margins, analysts at broker Jinyuan Futures said in a note.
But the market has already digested some of the bearish expectations, resulting in some restoration of valuation, Shengda analysts said.
Also, supporting prices were hopes that Chinese steel mills might start restocking seaborne cargoes in their preparation to meet needs during the Chinese New Year holiday in February, said analysts.
Additionally, the momentum to narrow basis, the difference between spot and futures prices, aided resilience in futures prices, said analysts.
Futures prices slid at a more rapid pace than the spot market earlier in the month, said a Shanghai-based analyst on condition of anonymity as he is not authorised to speak to media.
Coking coal and coke (DCJcv1), other steelmaking ingredients, fell 0.29% and 0.3%, respectively.
Steel benchmarks on the Shanghai Futures Exchange traded in a tight range. Rebar added 0.23%, hot-rolled coil nudged down 0.12%,wire rod (SWRcv1) slid 0.63%, and stainless steel HRC1! was little changed.
Source: Reuters