Iron ore futures rose on Tuesday as proposed cuts to Chinese port fees are expected to discourage long-term stockpiling.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) TIO1! gained 0.51% to 794 yuan($111.90) a metric ton.
The benchmark December iron ore (SZZFZ5) on the Singapore Exchange was 0.59% higher at $105.65 a ton by 0709 GMT.
China has proposed to lower port fees for state-owned enterprises holding cargoes under 30 days, a move that ANZ analysts said would discourage long-term stockpiling and accelerate inventory turnover, possibly tightening spot supply during periods of restocking.
Analysts at Chinese broker Galaxy Futures said a structural shortage of iron ore PB (Pilbara Blend) fines will support steel prices in the short term, but a rapid decline in domestic demand is likely to weigh on iron ore prices in the medium-term.
China’s steel prices are likely to remain under pressure for the foreseeable future as winter slows demand and finished steel inventories stay elevated, the China Iron & Steel Association said in its latest monthly report.
Sentiment on Tuesday was also bolstered as U.S. President Donald Trump said ties with China are “extremely strong” following a call with Chinese leader Xi Jinping, weeks after a meeting in South Korea where they agreed to a framework for a trade deal that has yet to be finalised.
Other steelmaking ingredients on the DCE were mixed, with coking coal NYMEX:ACT1! down 1% and coke (DCJcv1) up 0.98%.
Moderate increases in coke production from China’s Shanxi province, the country’s largest coke-producing hub, has been driven by higher margins from cheaper coking coal, consultancy Mysteel said.
Steel benchmarks on the Shanghai Futures Exchange increased. Rebar RBF1! rose 0.71%, hot-rolled coil EHR1! climbed 0.64%, wire rod (SWRcv1) increased 0.36% and stainless steel HRC1! was up 0.65%.
Source: Reuters