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Dalian iron ore futures extended gains on Tuesday, as traders remained optimistic about the near-term demand outlook amid low inventories and a slower-than-expected pace in falling consumption due to production cuts among some steel mills.
The most-traded January iron ore on China’s Dalian Commodity Exchange (DCE) ended daytime trade 2.12% higher at 866yuan a metric ton, the highest since Sept 25.
“Although hot metal output has recently been on the decline, the falling pace is relatively slow with the current output still at a comparatively high level for the period,” analysts from Shengda Futures said in a note.
“Daily hot metal output will likely fall to 2.42 million tons by the end of October and rebound to around 2.45 million tons, lending strong support to steelmaking raw materials.”
Robust demand pushed China’s iron ore imports to a record of 876.65 million tons in the first nine months of 2023, customs data showed.
Rio Tinto RIO.AX, RIO.L, the world’s largest iron ore producer, reported a 1.2% rise in its third-quarter iron ore shipments, as it ramped up production at the Gudai-Darri mine.
Improved steel demand also boosted sentiment, with daily transaction volumes of construction steel products climbing to 208,200 tons on Monday, the highest since May, data from consultancy Mysteel showed.
The benchmark November iron ore SZZFX3 on the Singapore Exchange was little changed at$117.25 a ton as of 0721GMT with fears ofrate hikes by the U.S. Federal Reserve limiting gains.
Other steelmaking ingredients also posted further gains, with coking coal DJMcv1 and coke DCJcv1 on the DCE up 1.63% and 1.4%, respectively.
Steel benchmarks on the Shanghai Futures Exchange showed mixedmovement, albeit marginally.
Rebar SRBcv1 added 0.61%, hot-rolled coil SHHCcv1 rose 0.67%,while wire rod SWRcv1 edged down 0.35% and stainless steel SHSScv1 lost 0.57%.
China’s key commodities output and economic data will be out on Wednesday.