October 14, 2014 / 4:24 AM / 5 years ago

Dalian iron ore extends gains to 3-week high, but glut weighs

* Spot iron ore jumped 4 pct on Monday
    * Shanghai rebar steadies after spike

    By Manolo Serapio Jr
    SINGAPORE, Oct 14 (Reuters) - Chinese iron ore futures rose
to their highest in more than three weeks on Tuesday, adding to
sharp gains from the previous session after being hammered for
most of this year, but lingering worries over a supply glut kept
a lid on gains.
    China's iron ore and steel futures surged as much as 4
percent on Monday when investors covered short positions amid
hopes that the markets may have found a bottom for now after
heavy losses for most of 2014. Prices for both have dropped
around 30 percent this year.
    The most-traded iron ore for January delivery on the Dalian
Commodity Exchange was up 1 percent at 587 yuan ($96)
a tonne by midday after earlier hitting 591 yuan, its loftiest
since Sept. 18.
    Dalian iron ore rose by its 3.9 percent ceiling on Monday,
rising in tandem with rebar steel futures in Shanghai.
    That helped lift spot iron ore prices, with the benchmark
62-percent grade for immediate delivery to China .IO62-CNI=SI
jumping 4 percent to $83.10 a tonne on Monday, its highest since
Sept. 17, according to data compiled by the Steel Index.
    Some traders were doubtful whether the gains would be
sustained as spot cargoes remained plentiful.
    "We're not very optimistic about the market so we don't
think it will be sustained," said a Shanghai-based iron ore
trader, adding there was modest buying interest for spot cargoes
from Chinese steel mills.
    "Further supportive Chinese data will be needed" to extend
the rally in iron ore prices, analysts at Australia and New
Zealand Banking Group said in a note.
    Aiding investor sentiment on Monday was data showing that
China's exports rose more than forecast in September and imports
unexpectedly increased, calming fears of a slowdown in the
world's No. 2 economy. 
    China's iron ore imports also rose in September to 84.69
million tonnes, the second highest monthly volume on record. 
    The most-active January rebar contract on the Shanghai
Futures Exchange was off 0.1 percent at 2,640 yuan a
tonne, after rising to 2,671 yuan earlier, its highest since
Sept. 22.
    
  Rebar and iron ore prices at 0356 GMT
                                                                                        
  Contract                          Last    Change   Pct Change
  SHFE REBAR JAN5                   2640     -3.00        -0.11
  DALIAN IRON ORE DCE DCIO JAN5      587     +6.00        +1.03
  SGX IRON ORE FUTURES DEC         83.23     -0.02        -0.02
  THE STEEL INDEX 62 PCT INDEX      83.1     +3.20        +4.01
  METAL BULLETIN INDEX             84.17     +3.93        +4.90
                                                                                        
                                                                                        
  Dalian iron ore and Shanghai rebar in yuan/tonne
  Index in dollars/tonne, show close for the previous trading day
 (1 US dollar = 6.1237 Chinese yuan)

 (Editing by Himani Sarkar)
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