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Dalian iron ore hits peak since July 2022
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Analysts warn of possible downside risks amid low steel
margins
(Updates prices and adds bullets)
BEIJING, March 3 (Reuters) - Dalian iron ore futures hit
an eight-month high on Friday, driven by favourable fundamentals
and optimism about future steel demand.
The most-traded May iron ore futures contract on
the Dalian Commodity Exchange (DCE) ended daytime trade 1.04%
higher at 919 yuan ($133.15) a tonne, a peak since July 2022.
On the Singapore Exchange, the benchmark April iron ore was up 0.1% at $126.5 a tonne, as of 0700 GMT.
Mills are ramping up production but their iron ore
inventories are relatively low, supporting iron ore prices, said
a Shanghai-based iron ore trader, who requested anonymity as he
is not authorised to speak to media.
The blast furnace operational rate of 247 surveyed steel
mills across China stood at 81.07% as of March 3, recording a
year-on-year rise of 6.35%, data from consultancy Mysteel
showed.
Portside iron ore inventories, however, fell by 2.23 million tonnes week-on-week to approximately 140 million tonnes, the data showed.
Steel prices are not rising as much as raw material prices,
leaving mills struggling to generate profits, a Shanghai-based
iron ore analyst said.
Rising steel output will also prevent steel margins from
improving, analysts from Huatai Futures said in a note.
The expectation of growing demand from steel mills supported
coke prices, while increasing overseas supply prospects
temporarily weighed on coking coal. Coke gained 0.46%,
while coking coal fell 1.01%.
Steel futures prices were on the uptrend. Rebar on the
Shanghai Futures Exchange climbed by 1.26% to 4,272
yuan a tonne, hot-rolled coil gained 1.34%, stainless
steel grew 0.8%. Wire rod ticked down 0.1%,
though.
($1 = 6.9020 Chinese yuan renminbi)
(Reporting by Amy Lv and Dominique Patton in Beijing; Editing
by Janane Venkatraman and Eileen Soreng)
