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Iron ore futures prices rebounded on Thursday after falling for five straight sessions, with sentiment lifted by some portside restocking ahead of a holiday in top consumer China and market talk of a possible steel output cut.
Steelmakers typically stock up portside ore cargoes ahead of the Dragon Boat Festival, falling on June 8-10 this year, analysts said.
Transaction volumes at major ports climbed 35% day-on-day to 1.17 million metric tons on Wednesday, data from consultancy Mysteel showed.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) DCIOcv1 ended daytime trade0.96% higher at 839.5 yuan ($115.85) a ton.
The benchmark July iron ore SZZFN4 on the Singapore Exchange jumped 1.49% to$108.7a ton, as of 0809 GMT, after hitting an intra-day high at $109.8 a ton.
Also, a boost was filtered through into the ore market from a strengthening steel market on market chatter of a crude steel output cut of up to 20 million tons in top producer and consumer China, said analysts.
The National Development and Reform Commission, which announced in early April it would continue to manage crude steel output in 2024, did not immediately respond to a Reuters’ request for comment.
Most steel benchmarks on the Shanghai Futures Exchange surrendered earlier losses and ended higher.
Rebar SRBcv1 climbed 0.63%, hot-rolled coil SHHCcv1 added 1.06% and wire rod SWRcv1 advanced 0.46%.
“The price rise in the afternoon session has something to do with the talk of steel output cuts as well as a weaker (U.S.) dollar =USD,” said a Shanghai-based analyst, requesting anonymity as he was not authorised to speak to media.
However, diminishing demand and high supplies continued to act as a headwind for iron ore, according to analysts.
Demand wilted with the daily crude steel output among key members under the China Iron and Steel Association sliding to around 2.18 million tons during May 21-31, a fall of 1.49% from the previous 10-day period, CISA data showed.
Other steelmaking ingredients on the DCE continued downtrend, with coking coal DJMcv1 and coke DCJcv1 down 1.59% and 0.11%,respectively.
Stainless steel SHSScv1 shed 0.66%.