Dalian iron ore jumps in tandem with Shanghai steel on demand hopes
* Dalian iron ore climbs as much as 4.4 pct
* Shanghai rebar hits highest level since August
By Manolo Serapio Jr
MANILA, March 1 Iron ore and steel futures in
China climbed to multi-month highs on Tuesday, buoyed by
expectations of firmer steel demand in the world's top consumer
from this month.
Construction activity usually picks up from March along with
the warmer spring weather, prompting Chinese steel producers to
lift output and boosting demand for raw material iron ore.
The most-traded May iron ore on the Dalian Commodity
Exchange rose as much as 4.4 percent to 380 yuan
($58) a tonne, its strongest since Sept. 11. It was up 2.9
percent at 374.50 yuan by 0300 GMT.
On the Shanghai Futures Exchange, construction-used rebar
for May delivery was up 2.3 percent at 1,984 yuan per
tonne after rising as far as 1,991 yuan, its loftiest since Aug.
28.
"Steel futures are rising on expectations for demand into
the Chinese new year as construction companies stock up on the
reactivation of new projects authorised by Beijing," analysts at
SP Angel said in a note.
Daily crude steel output by key Chinese mills stood at 1.561
million tonnes in the first 10 days of February, up 3.7 percent
from the previous 10 days, according to the China Iron and Steel
Association.
Stockpiles of finished steel products held at these mills
totaled 13.85 million tonnes, up 15.2 percent from the prior 10
days, based on the data released in mid-February.
Sharp gains in Chinese steel prices has fueled a recovery in
iron ore prices in 2016 following a three-year decline.
Spot iron ore topped $50 a tonne last week for the first
time since October, but has since slipped back below that level.
Iron ore for immediate delivery to China's Tianjin port
.IO62-CNI=SI was off 0.2 percent at $48.90 a tonne on Monday,
according to The Steel Index.
But the raw material still ended February up 17.8 percent,
marking its largest monthly gain since December 2012.
Some junior Australian and other Western iron ore miners are
hedging forward cargoes for the first time in months after
prices surged to their highest since October, looking to cash in
on a price rally many fear may not last.
After disruptions in January, iron ore shipments from top
suppliers Australia and Brazil picked up last month, which
should limit further gains in prices, Westpac Banking Corp said,
citing its shipping data.
"We would expect to see further evidence of increased supply
in March shipping data with freight rates remaining low,
increased supply coming onstream in Australia and port
disruptions being addressed in Brazil," the bank said in a note.
"This should continue to cap iron prices in the early $50s."
Rebar and iron ore prices at 0300 GMT
Contract Last Change Pct Change
SHFE REBAR MAY 1984 +45.00 +2.32
DALIAN IRON ORE DCE DCIO MAY 374.5 +10.50 +2.88
SGX IRON ORE FUTURES MAY 45.42 +0.24 +0.53
THE STEEL INDEX 62 PCT INDEX 48.9 -0.10 -0.20
METAL BULLETIN INDEX 49.62 +1.33 +2.75
Dalian iron ore and Shanghai rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.5397 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Christian
Schmollinger)
FMG Price at posting:
$2.17 Sentiment: Buy Disclosure: Not Held
(20min delay)