News: RIO UPDATE 1-Speculative buying lifts China iron ore futures to contract high

(Adds analysts comments; Updates with closing prices)

Benchmark iron ore futures in China surged more than 7% on Thursday to hit a contract high, as speculative buying was fuelled by expectations that a recovering economy would lead to strong demand for the steelmaking ingredient.

The most actively traded iron ore futures on the Dalian Commodity Exchange DCIOcv1 , for May delivery, soared as much as 7.3% to 976 yuan ($149.10) per tonne, before closing up 6.8% at 971 yuan.

"We believe benchmarks were over-inflated to begin with, given that large volumes of 'hot money' have filtered through into iron ore as a speculative play on future economic growth," said Atilla Widnell, managing director of Navigate Commodities.

Zhuo Guiqiu, an analyst with Jinrui Capital, also suggested that more money from governments' loose monetary policies to weather the pandemic impact was flowing into markets with better fundamentals.

"Iron ore is expected to face supply shortage while demand in both China and overseas markets are seen higher next year," Zhuo said.

China's Dalian bourse said it would adjust speculative margin requirements for May iron ore futures and further limit non-futures members' single-day open positions starting next week.

Prices of spot 62% iron ore for delivery to China SH-CCN-RINOR62 , compiled by SteelHome consultancy, was unchanged at $146.5 per tonne on Wednesday from the previous session.

Meanwhile, steel rebar on the Shanghai Futures Exchange SRBcv1 jumped 2.4% to 4,040 yuan per tonne.

Hot-rolled coil SHHCK1 ended up 2.9% at 4,348 yuan a tonne after top steel producer Baoshan Iron & Steel raised prices for its January delivery.

FUNDAMENTALS

• Dalian coking coal futures DJMF1 , for January delivery, gained 1.2% to 1,602 yuan a tonne.
• Coke futures DCJcv1 increased 1.4% to 2,617 yuan per tonne.
• Shanghai stainless steel futures SHSScv1 , for February delivery, dipped 0.1% to 13,460 yuan a tonne.
• Rio Tinto's legal destruction of ancient Australian rockshelters showed the mining sector was exposed to material investment risks without more reforms, institutional investors said, backing the findings of a review into the incident.

($1 = 6.5449 Chinese yuan)