Band Enrico Dela Cruz
June 8 (Reuters) – Benchmark iron ore futures in Asia fell on Wednesday, with the key Dalian contract extending losses to a second session as reduced profitability at Chinese steel mills following a recent rise in steel ingredient prices weighed on feeling.
The most traded iron ore for September delivery on the Dalian Commodity Exchange in China DCIocv1 ended day trading down 0.5% at 926.50 yuan ($138.85) a ton.
On the Singapore Stock Exchange, the most active iron ore contract in July was down 0.2% at $144.30 a tonne, as of 0702 GMT.
A rally that began in late May propelled Dalian Iron Ore to a 10-month high on Monday, while the SGX contract hit its highest level in nearly five weeks on Tuesday, buoyed by renewed optimism around demand from China’s largest steel producer.
Concerns about dwindling inventories of imported iron ore in Chinese ports fueled this rally. SH-TOT-IRONINV
But iron ore and other more expensive steel inputs mean reduced profits for steelmakers who have yet to see a significant recovery in steel demand, even as China eased COVID-related restrictions. 19.
“The short-term trend is up but the valuation is high and volatility risk will increase in June-July,” analysts at Zhongzhou Futures said in a note.
The iron ore spot price for the 62% benchmark material in China was pegged at $147 a tonne on Tuesday by consultancy SteelHome, the highest since April 22. SH-CCN-IRNOR62
“Iron ore is fluctuating at a high level,” Zhongzhou analysts said, blaming weak profits that prompted factories to be cautious about buying.
Structural steel rebar on the Shanghai Futures Exchange SRBcv1 increased by 1%, while hot rolled coils SHHCcv1 advanced by 0.6%. Stainless steel SHSScv1 climbed 1.6%.
Dalian Coking Coal DJMcv1 resumed its rally, gaining 2.6%, as an outbreak of COVID-19 in Inner Mongolia, one of China’s major coal-producing regions, raised concerns about the supply of steel raw material. Coke DCJcv1 jumped 1.8%.
Iron ore and coking coal outpace Shanghai steel price hikehttps://tmsnrt.rs/3Qa3DBG
(Reporting by Enrico Dela Cruz in Manila; Editing by Sherry Jacob-Phillips)
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