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Iron ore recovers with steel in China after three-day slide
September 8, 2017 / 3:02 AM / 3 months ago

Iron ore recovers with steel in China after three-day slide

* Demand for future iron ore cargoes “very good” - trader

* But Dalian iron ore futures down for 2nd straight week

By Manolo Serapio Jr

MANILA, Sept 8 (Reuters) - Iron ore futures rebounded in China on Friday after a three-day fall as steel prices picked up, with traders saying demand for the steelmaking commodity remained strong despite Beijing’s tighter environmental measures that have led to mill closures.

Stocks of iron ore at China’s ports dropped for a fifth straight week last week, to 133.35 million tonnes, the lowest since May, according to data tracked by SteelHome consultancy. SH-TOT-IRONINV

“Demand for future iron ore cargo is very good and because the renminbi is still appreciating. So traders would like to buy future cargo in dollars, stockpile them and sell them in renminbi,” said a Beijing-based iron ore trader.

The most-traded iron ore on the Dalian Commodity Exchange was up 1 percent at 555.50 yuan ($86) a tonne by 0239 GMT. But the contract has lost nearly 4 percent so far this week owing to losses in recent sessions, on course for a second weekly drop.

On the Shanghai Futures Exchange, the most-active rebar rose 0.8 percent to 4,015 yuan per tonne, and was up slightly for the week.

China plans to conduct 15 rounds of inspections during its new campaign to curb smog during winter. The inspections began on Sept. 1 and will continue through March 2018.

The inspections have been part of China’s stricter environmental controls that have led to closures of many steel mills and coal mines producing lower-grade material.

“Any supply cuts led by the government will continue to support steel prices and iron ore will follow,” said the trader.

In its anti-pollution battle, China has called on steel producers to halve output in four northern provinces - Hebei, Shanxi, Shandong, Henan - as well as Beijing and Tianjin, during the peak winter heating months from around late November to late February.

Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB slid 1.6 percent to $75.61 a tonne on Thursday, according to Metal Bulletin, tracking the early-week losses in Chinese futures.

That was the lowest price since Aug. 17 for the spot benchmark, which has lost 4.2 percent so far this week, after an eight-week rally.

$1 = 6.4639 Chinese yuan Reporting by Manolo Serapio Jr.; Editing by Amrutha Gayathri

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