Iron ore prices rose for a second session on Thursday, as Chinese steelmakers stepped up seaborne purchases ahead of a national holiday, although shrinking steel margins clouded the demand outlook.
The most-traded iron ore contract on China’s Dalian Commodity Exchange (DCE) DCIOcv1 closed daytime trade 0.28% higher at 710.5 yuan ($105.92) a metric ton, still 4.6% below a multi-week high of 745 yuan hit on September 8. The benchmark October iron ore SZZFV6 on the Singapore Exchange added 0.52% to $96.3 a ton, as of 0751 GMT, hovering below the key psychological level of $100 for six straight sessions.
Several steelmakers booked seaborne cargoes for the upcoming week-long National Day holiday break from October 1 to 7.
Daily seaborne iron ore transaction volume jumped 43% to 1.41 million tons on Wednesday from the day before, data from consultancy Mysteel showed.
“We see $90-95 per ton as a solid downside support level over the near term at current high freight rates,” analysts at Goldman Sachs said in a Wednesday note.
“From October-November, we believe Chinese steel production and iron ore demand will soften, at a time when low-cost seaborne exports from the major suppliers and Simandou are increasing,” they said.
Steel mills may slow restocking as tumbling margins discourage them from ramping up output, curbing price upside, analysts said.
Other steelmaking ingredients snapped up earlier gains to trade lower in the afternoon, with coking coal DJMcv1 and coke DCJcv1 down 1.65% and 0.63%, respectively.Steel benchmarks on the Shanghai Futures Exchange moved sideways. Rebar SRBcv1 shed 0.13%, hot-rolled coil SHHCcv1 ticked down 0.12% while stainless steel SHSScv1 jumped 1%.
“The real steel demand has not shown clear signs of recovering, missing earlier expectations, but supply contraction persisted as losses exacerbated,” analysts at broker Zhengxin Futures said in a note.
($1 = 6.7077 Chinese yuan)
(Reporting by Amy Lv and Lewis Jackson; Editing by Eileen Soreng and Rashmi Aich)
