Iron ore futures rebounded on Thursday as a mandated production cut ahead of a military parade in China seemed to be less severe and shorter than expected, allaying demand concerns.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) closed daytime trade 0.98% higher at 772.5 yuan ($107.63) a metric ton.
The benchmark September iron ore on the Singapore Exchange rose 0.55% to $101.3 a ton by 0704 GMT.
Both the benchmarks had fallen for six straight sessions through Wednesday, weighed by demand concerns as steelmakers in top Chinese production hub Tangshan were required to curb production for better air quality in Beijing for the military parade on September 3 commemorating the end of World War II.
The length of the production restriction in Tangshan is shorter than expected, therefore the overall impact will be limited, analysts said.
Hot metal output, a gauge of iron ore demand, will likely hold steady this week, lending support to ore prices, said one of the analysts on condition of anonymity as he is not authorized to speak to media.
Still, crude steel production at China’s top ten steelmaking provinces and autonomous regions dipped 3.3% year-on-year between January-July, according to data from the country’s National Bureau of Statistics.
Other steelmaking ingredients on the DCE lost ground, with coking coal and coke down 1.5% and 0.95%, respectively.
Steel benchmarks on the Shanghai Futures Exchange all fell. Rebar edged down 0.03%, hot-rolled coil lost 0.44, wire rod eased 0.15% and stainless steel shed 0.27%.
($1 = 7.1776 Chinese yuan)
(By Amy Lv and Lucas Liew; Editing by Sumana Nandy and Subhranshu Sahu)
