Chinese iron ore futures rose
for a fourth straight session to hit a one-month high on Monday
as steel mills in the world's top consumer picked up buying of
the raw material.
The benchmark September contract on the Dalian Commodity
Exchange marked a session-high of 436.5 yuan ($70) a
tonne, its strongest since March 26. It was trading 4.2 percent
higher at 430 yuan by 0204 GMT.
Chinese steel mills have stepped up restocking since last
week as they raise steel production, lured by improving margins
after steep losses in iron ore, industry sources said.
Spot iron ore prices .IO62-CNI=SI tumbled to $46.7 a tonne
on April 2, their lowest since the Steel Index (TSI) began
compiling prices in late 2008.
"Demand from mills is improving, while inventories at the
main ports are falling as new cargoes haven't arrived yet,
creating a time-gap for the rally in iron ore," said Hu
Xiaodong, an analyst with Nanhua Futures in Hangzhou.
Iron ore for immediate delivery to China's Tianjin port
jumped 5.9 percent to $57.00 a tonne on Friday, its highest
since mid-March and its biggest single-day percentage gain since
October 2012, according to TSI data.
The extended rally in iron ore prices has driven up rebar
futures for the fourth consecutive session. They had inched up
0.85 percent to 2,385 yuan by 0204 GMT.
The average daily output from China's large steelmakers rose
5.1 percent to 1.695 million tonnes between April 1-10 from
March 21-31, industry data showed.
However, some traders remained concerned the rally would be
unsustainable due to the oversupply in iron ore and sluggish
steel demand hit by a property downturn.
"The strong gains in iron ore prices are likely to reduce
mills' margins and force them to slow down production, weakening
appetite for iron ore," said an iron ore trader in Beijing.
Rebar and iron ore prices at 0204 GMT
Dalian iron ore and Shanghai rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.1956 Chinese yuan renminbi)
source: http://in.reuters.com