June 14, 2019 / 3:33 AM / a month ago

China's iron ore hits record high on way to best week in over 4 mths

* Red-hot rally underpinned by supply, demand outlook

* Dalian iron ore boosts 2019 gain to around 80%

* Iron ore is 2019 top gainer in China ferrous complex

By Enrico Dela Cruz

MANILA, June 14 (Reuters) - Dalian iron ore benchmark surged to a record in early trade on Friday and was headed for its best week since February, buoyed by expectations of sustained tightness in supply and brisk demand amid China’s renewed drive to support its economy.

The most-actively traded September iron ore contract on the Dalian Commodity Exchange rose as much as 3.9% to 796 yuan ($115) a tonne, on course to end the week with a gain of around 12%. That was the highest mark for the Chinese benchmark since Dalian iron ore futures started trading in 2013.

Some analysts say there is still no end in sight to the steel raw material’s red-hot rally that began shortly after the catastrophic collapse of a tailings dam of miner Vale SA in Brazil in late January.

Safety concerns have prompted closures of other Vale mines this year as well, reducing supply to top buyer China, which makes about half of the world’s steel.

Imported iron ore inventories at Chinese ports have declined to 121.6 million tonnes as of last week, the lowest since early 2017, data compiled by SteelHome consultancy showed. SH-TOT-IRONINV

“Supply losses in Brazil look structural, leaving the market undersupplied until 2020,” ANZ analysts said in a note. “Attractive steel margins amid stronger infrastructure spending in China bodes well for demand.”

On Thursday, China Vice Premier Liu He sought increased support for the economy and ample liquidity in the financial system, suggesting Beijing would soon unveil more policies to bolster growth amid rising U.S. trade pressure.

“China has a firm policy to maintain growth, almost at any cost,” analysts at SP Angel in London said in a note. Beijing is ramping up stimulus to support the economy hit by United States’ anti-dumping measures and higher tariffs, they said.

Spot iron ore prices have also resumed their climb, with the benchmark 62% grade for delivery to China SH-CCN-IRNOR62 hovering near a five-year high at $107.50 a tonne on Thursday, up from $104.50 the previous day.

The rest of China’s ferrous complex was mixed on Friday, with other steelmaking raw materials lower while steel futures edged higher.

Coking coal was down 0.3% at 1,397 yuan a tonne as of 0251 GMT. Coke slipped 0.6% to 2,122 yuan.

The most-actively traded October construction steel rebar contract on the Shanghai Futures Exchange was up 0.2% at 3,782 yuan a tonne. Hot rolled coil, used in cars and home appliances, gained 0.6% to 3,644 yuan a tonne.

$1 = 6.9226 yuan Reporting by Enrico dela Cruz; Editing by Tom Hogue

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