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Dalian iron ore futures advanced on Monday, recovering from last week’s selloff that dragged the benchmark prices to multi-week lows, but worries over slumping steel demand in China kept overall enthusiasm in check.
Iron ore’s most-traded January contract on China’s Dalian Commodity Exchange DCIOcv1 ended daytime trading 1.7% higher at 688.50 yuan ($107.85) a tonne. It slumped to a one-month low of 642.50 yuan on Oct. 21.
The overall mood improved after heavily-indebted property firm China Evergrande Group 3333.HK, appeared to have averted default, and a set of weekly industry data showed a drop in iron ore shipments to China from Australia and Brazil, analysts said.
But the steelmaking ingredient’s most-active November contract on the Singapore Exchange SZZFX1 surrendered early gains, turning 0.5% lower at $117.95 a tonne by 0708 GMT as caution prevailed.
“The key dangers for iron ore are still seasonally diminishing steel demand, prices and margins, and the probable growth in Chinese portside inventories,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.
A power supply crunch in top steel producer China has forced mills to cut or halt production, which has already been hampered by output controls aimed at curbing emissions.
China’s daily crude steel output in September plunged to the lowest level since December 2018, government data showed.
Imported iron ore stocked at Chinese ports increased to 140.2 million tonnes last week, the loftiest since April 2019, based on the latest SteelHome consultancy estimate. SH-TOT-IRONINV
China’s latest COVID-19 outbreak “might prompt a risk-off sell-off”, Widnell also said.
Spot iron ore in China sank to a one-month low of $117.50 a tonne on Friday, SteelHome data showed. SH-CCN-IRNOR62
Construction steel rebar on the Shanghai Futures Exchange SRBcv1 fell 1.7%, while hot-rolled coil SHHCcv1 slumped 1.9%. Stainless steel SHSScv1 slipped 0.1%.
Dalian coking coal DJMcv1 shed 0.5%, while coke DCJcv1 jumped 3.1%.