Dalian iron ore futures pulled back from a contract high on Tuesday, although losses were limited by buoyant steel prices in top steel producer China.
Steel benchmarks scaled nine-month peaks, propelled by improved demand prospects as China has entered its peak spring construction season and more evidence of economic recovery have emerged.
The most-traded May iron ore on China’s Dalian Commodity Exchange DCIOcv1 ended daytime trade 0.2% lower at 920 yuan ($134.02) a tonne. It hit 936 yuan earlier in the session, a new high for the contract.
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Benchmark April iron ore on the Singapore Exchange SZZFJ3 was down 0.2% at $131.25 a tonne, as of 0702 GMT, after earlier touching a fresh three-week high of $132.40.
On the Shanghai Futures Exchange, the most-traded rebar SRBcv1 rose 0.5% and hot-rolled coil SHHCcv1 gained 0.6%. Both hit their highest since June earlier in the day.
“Data shows steel and iron ore inventories at China’s mills are sliding, with China’s construction period traditionally running hot from March through to June,” broker SP Angel’s analysts said in a note.
Chinese steelmakers will need to lift their iron ore replenishment volumes this month to feed blast furnaces that have been brought back online following maintenance shutdown, Mysteel consultancy said.
Declining iron ore portside inventory in China, which hit a four-week low of 138.6 million tonnes last week, based on SteelHome consultancy data SH-TOT-IRONINV, added to the market optimism, analysts said.
However, traders exercised caution as Chinese regulators may take steps to curb iron ore prices, having warned against excessive price speculation and hoarding.
Other Dalian steelmaking inputs fell, with coking coal DJMcv1 and coke DCJcv1 down 1.2% and 1.9%, respectively.
Shanghai wire rod SWRcv1 edged up 0.1%, while Shanghai stainless steel SHSScv1 added 0.8%.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Rashmi Aich and Subhranshu Sahu)
