Iron ore hits 1-month high as China port stocks dip Thu Aug 6,...

Iron ore hits 1-month high as China port stocks dip
Thu Aug 6, 2015 10:28am IST

* Iron ore stocks at China's ports lowest in nearly a month * Chinese mills may be lifting output ahead of curbs - ANZ By Manolo Serapio Jr MANILA, Aug 6 (Reuters) - Spot iron ore prices rose to one-month highs as inventories of the raw material at Chinese ports dropped, indicating steel producers may be lifting output ahead of curbs later this month before a key event in September.

Stockpiles of iron ore at 44 Chinese ports dropped by 0.5 million tonnes to 81.95 million tonnes as of end-July, according to data tracked by industry consultancy Steelhome SH-TOT-IRONINV. That was the lowest level in almost a month.

"The unseasonal decline in iron ore port stocks in China suggests an increase in steel output before production cuts in September," ANZ Bank analysts said in a note.

Beijing will shut factories to ensure clean air during a commemoration of the 70th anniversary of the end of World War Two on Sept. 3. The controls will be imposed from Aug. 20.

The measures are expected to extend to areas surrounding Beijing including the top steel producing province of Hebei and neighbouring city of Tianjin, industry sources say, following a similar effort last year ahead of a regional summit in November.

Some traders have said mills were likely to produce more steel before the stoppage, helping boost short-term demand for iron ore.

Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI climbed 2.6 percent to $56.40 a tonne on Wednesday, its loftiest since July 1, according to The Steel Index.

The steelmaking raw material has rebounded nearly 28 percent from a decade-low of $44.10 in early July.

Cautious inventory building among Chinese steel mills may be behind the recovery in iron ore prices, Marex Spectron head of research Georgi Slavov said.

"If this effort turns into a full scale restocking non-seasonal industrial cycle, the upside for the iron ore price appears to be much greater than the downside," Slavov said in a note this week.