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China iron ore claws back some ground, but logs 5th weekly fall

Kitco News

By Enrico Dela Cruz

MANILA, Aug 23 (Reuters) - Chinese iron ore futures rose more than 3% on Friday after a brutal sell-off during the past few days, but logged their fifth consecutive weekly fall amid pessimism about demand prospects for the steelmaking ingredient.

The most-traded January 2020 iron ore on the Dalian Commodity Exchange ended 3.6% higher at 613 yuan
($86.56) a tonne, after advancing as much as 4.1% earlier in the session.

In the Singapore Exchange, the front-month September 2019 contract gained 4.2% to $86.95 a tonne in afternoon trade.

Dalian iron ore has slumped more than 20% in August, on track to log its worst month since March 2018 after eight consecutive months of gains, as concerns over tight supply eased while demand slowed.

Output curbs in highly-polluted steelmaking hubs in China and a slowdown in the domestic economy due to a bruising trade war with the United States have clouded the demand outlook for iron ore and other raw materials in the world's top steel producer.

The steel production curbs are expected to continue, with some areas even stepping up restrictions, and may intensify ahead of China's National Day celebrations in early October.

"We could see further weakness," said analyst Edward Meir, commodity consultant at brokerage INTL FCStone in London.

"The gains we saw ... seem to be just a short-lived technical bounce, as a sense of unease still seems to linger over a number of markets ahead of the September 1st U.S. tariff imposition on the next tranche of Chinese exports," he said.


FUNDAMENTALS


* Benchmark 62% iron ore for delivery to China , as assessed by SteelHome consultancy, was steady at $86.50 a tonne on Thursday, the lowest since March 29.
* Steel futures were also firmer on Friday, with the most-active rebar contract on the Shanghai Futures Exchange up 0.8% at 3,715 yuan a tonne. Hot-rolled coil edged up 0.4% to 3,724 yuan.
* Other steelmaking ingredients were mixed, with Dalian coking coal up 0.2% at 1,328.50 yuan a tonne, while coke edged down 0.1% to 1,950 yuan.
* China will accelerate the launch of coking coal, coke and iron ore options on the Dalian exchange in an effort to further enrich hedging tools, the state-backed Securities Times reported on Thursday.
* China's yuan fell for a seventh straight session on Friday, and was on course for its third weekly loss in four as the United States prepared to ratchet up tariff pressure next month.
* For the top stories metals and other news, click TOP/MTL or MET/L


($1 = 7.0814 yuan)

(Reporting by Enrico dela Cruz; Editing by Sriraj Kalluvila)

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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