Iron ore futures prices rebounded on Thursday after falling for five straight sessions, buoyed by 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, which falls 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, according to data from consultancy Mysteel. The most-traded September iron ore contract on China’s Dalian Commodity Exchange ended daytime trade 0.96% higher at 839.5 yuan ($115.85) a ton. The benchmark July iron ore on the Singapore Exchange jumped 1.49% to $108.7 a ton, after hitting an intra-day high of $109.8 a ton.
A boost in the ore market was also driven by a strengthening steel market amid chatter of a crude steel output cut of up to 20 million tons in China. 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 request for comment.
Most steel benchmarks on the Shanghai Futures Exchange ended higher, with rebar climbing 0.63%, hot-rolled coil adding 1.06%, and wire rod advancing 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," said a Shanghai-based analyst.
However, diminishing demand and high supplies continued to act as a headwind for iron ore. Daily crude steel output among key members under the China Iron and Steel Association slid 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 their downtrend, with coking coal and coke down 1.59% and 0.11%, respectively. Stainless steel shed 0.66%.
