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Iron ore futures wobbled on Tuesday, initially extending losses on concerns about weak steel demand in China, before reversing direction as a tropical storm headed toward Port Hedland in top supplier Australia.
The most-traded September iron ore on China’s Dalian Commodity Exchange ended daytime trade 1.5% higher at 798.50 yuan ($115.97) a tonne. It earlier shed as much as 1.7% to 773.50 yuan, its weakest since March 27.
On the Singapore Exchange, the steelmaking ingredient’s benchmark May contract was up 1.7% at $119.50 a tonne, as of 0700 GMT, also reversing earlier losses. It slumped to a three-month low of $115.20 on Monday.
Port Hedland, the world’s biggest export point for iron ore and is used by BHP Group, Fortescue and billionaire Gina Rinehart’s Hancock Prospecting, will be cleared early on Wednesday as a tropical cyclone approaches, the Pilbara Ports Authority said.
Iron ore’s rebound followed selloffs spurred by disappointment over a slow seasonal pickup in steel demand in China.
“The peak season for steel demand is not strong,” Huatai Futures analysts said in a note.
With weak steel demand for infrastructure projects in China and sluggish activity in the domestic real estate sector, they said “the market pessimism has increased”.
Fears of regulatory intervention in China to curb iron ore prices have also dragged down futures below $120 a tonne since last week.
China’s state planner, the National Development and Reform Commission, last week said authorities would step up supervision of iron ore markets, asking traders to not deliberately exaggerate price increases.
Other steelmaking inputs on the Dalian exchange also advanced, with coking coal ACT1! and coke (DCJcv1) up 0.5% and 0.9%, respectively.
Rebar on the Shanghai Futures Exchange RRBF1! slipped 0.2% and hot-rolled coil EHR1! dipped 0.3%, while wire rod (SWRcv1) gained 0.1% and stainless steel HHRC1! rose 2.5%.