Prices of iron ore futures rose on Wednesday as firmer exports and softer supply in China outweighed concerns over the top consumer’s faltering demand outlook and economic recovery.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 1.09% higher at 694 yuan ($97.56) a metric ton.
The benchmark October iron ore on the Singapore Exchange was up 2.52% at $92.9 a ton, as of 0710 GMT.
China’s exports grew at their fastest pace in nearly 1-1/2 years in August, suggesting manufacturers were rushing out orders ahead of tariffs expected from a growing number of trade partners, while imports fell amid weak domestic demand.
The mixed trade data highlights the challenges that Beijing faces as policymakers try to bolster overall growth without becoming too reliant on exports, especially given the tightening of consumers’ purse strings.
Strong steel exports continue to offset some of the weakness in the steel industry, which is battling weak margins, ANZ analysts saidin a note.
Inventories of five major carbon steel products held by Chinese steel mills slipped for a sixth straight week from Aug. 30-Sept. 5, hitting their lowest in over six years, said Chinese consultancy Mysteel.
China’s steel production recovered somewhat over the week, as improved profit margins due toa decrease in production costs led some steel mills to resume operations, Mysteel added.
The country’s iron ore imports in August fell 1.38% from July and slipped 4.73% year-on-year, customs data showed on Tuesday, as falling steel prices and a gloomy demand outlook dampened buyers’ appetite.
Other steelmaking ingredients on the DCE were stronger, with coking coal DJMcv1 and coke DCJcv1 up 2.35% and 2.78% respectively.
Steel benchmarks on the Shanghai Futures Exchange posted gains. Rebar SRBcv1 strengthened about 1.6%, hot-rolled coil SHHCcv1 advanced 1.37%, wire rod SWRcv1 gained around 1.0%, and stainless steel SHSScv1 edged 0.15% higher.
Source: Reuters