April 11, 2019 / 3:00 AM / a month ago

China's steel, iron ore futures subdued after recent rallies

* Iron ore edges up on strong demand, supply worries

* Construction steel rebar hovers near 7-1/2-year peak

By Enrico Dela Cruz

MANILA, April 11 (Reuters) - China’s steel and iron ore futures ticked higher in early trade on Thursday, supported by expectations that domestic demand will remain strong amid brisk construction activity in the world’s biggest steelmaker.

The most active October 2019 rebar contract on the Shanghai Futures Exchange rose as much as 1.0 percent to hit 3,793 yuan ($565.17) a tonne, hovering near its 7-1/2-year intraday peak of 3,795 yuan, which was reached on Tuesday.

The most traded September 2019 iron ore contract on the Dalian Commodity Exchange climbed as much as 1.5 percent to 656.5 yuan a tonne.

Thursday’s gains, however, were muted compared with the recent upturn that brought iron ore prices to the highest since 2013 when China launched futures trading for the steelmaking feedstock.

“There’s not much news at the moment, but demand for iron ore is expected to continue rising, which should support prices,” a Shanghai-based trader said.

“I heard from some steel mills in northern China that they are increasing production. And with the winter output restrictions having been lifted, we’ll see some more demand for iron ore in the near future,” the trader said.

As Chinese steel mills’ appetite for iron ore remains strong, worries persist about supply tightening as shipments from top suppliers Brazil and Australia decline.

Global iron ore supply may not meet demand this year due to the anticipated reduced supply from Brazilian iron ore miner Vale SA, whose operations in Brazil have been curtailed following a fatal tailings dam collapse in January.

Adding to concerns about the shortfall, major iron ore producers in Australia have lowered their shipment estimates for this year, after their operations were hit by a tropical cyclone in late March.

Hot rolled coil inched up as much as 0.9 percent to 3,702 yuan a tonne.

Coking coal was up 0.2 percent at 1,326.5 yuan a tonne by 0216 GMT while coke inched down 0.8 percent to 2,011.5 yuan.

($1 = 6.7112 Chinese yuan)

Reporting by Enrico dela Cruz; editing by Richard Pullin

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