Dalian iron ore futures prices snapped a four-session losing streak to end higher on Thursday due to a fall in global shipments, although lingering concerns about oversupply curbed gains.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) TIO1! traded 0.65% higher at 777.5 yuan ($109.15) a metric ton.
The benchmark December iron ore (SZZFZ5) on the Singapore Exchange rose 0.37% to $103.9 a ton, as of 0721 GMT.
Shipments from top producers Australia and Brazil declined simultaneously, leading to a decrease in global shipments, said Chinese broker Everbright Futures.
However, with the optimism and rally following the Fourth Plenum now fading, markets are left with few new concrete details on “anti-involution” measures or long-term steel capacity reforms, said Atilla Widnell, managing director at Navigate Commodities in Singapore.
Anti-involution refers to China’s campaign aimed at curbing overcapacity and unsustainably low prices across many industries.
So far, there has been little incentive for mills to permanently decommission plants, raising concerns that oversupply will continue for the time being. As a result, relatively high steel output during a season of weak demand is weighing on steel prices, profit margins, and input costs such as iron ore, Atilla added.
Additionally, iron ore prices have come under pressure due to concerns over weaker demand, as an environmental production-cut warning for steel mills in Hebei province is expected to affect blast furnace operations, according to analysts at ANZ.
Total iron ore stockpiles across ports in China climbed 1.53% week-on-week to about 135.6 million tons, as of October 31, according to SteelHome data.
Other steelmaking ingredients on the DCE gained ground, with coking coal NYMEX:ACT1! and coke (DCJcv1) up 2.38% and 2.07%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were up. Rebar RBF1! rose 0.4%, hot-rolled coil EHR1! climbed 0.22%, stainless steel HRC1! gained 0.28%, and wire rod (SWRcv1) closed flat.
Source: Reuters