Iron ore pares gains after talks of China steel control (updated)

China Steel

18/06/2024 09:16

(Updates closing prices, adds trader comment)
       BEIJING, June 18 (Reuters) - Iron ore futures prices
rebounded on Tuesday, but were off their session high as
investors booked profits following market talks of controlling
steel output in the southern province of Fujian in top consumer
China.
    The most-traded September iron ore contract on China's
Dalian Commodity Exchange (DCE)  DCIOcv1  gave up earlier gains
to end daytime trade 0.24% higher at 820.5 yuan ($113.08) a
metric ton.
    They had hit an intra-day high at 840 yuan a ton earlier,
rebounding from a drop in the previous session.
    The benchmark July iron ore  SZZFN4  on the Singapore
Exchange jumped 1.09% to $106.35 a ton, as of 0732 GMT. 
    Talks circulated that authorities in Fujian met with local
steelmakers on Monday to discuss details about output
restrictions this year, requiring local state-run manufacturers
not to exceed 85% of approved steel capacity before the meeting.
 
    The provincial department of industry and information
technology did not immediately respond to a Reuters fax
requesting comment.
    Crude steel output in Fujian province climbed by 6.5%
year-on-year to approximately 34.06 million tons in 2023,
accounting for 3.3% of the country's total, data from the
National Bureau of Statistics showed.
    "The news of crude steel control had already been priced in,
so some traders closed certain short positions following the
latest talks," said a north China-based trader, requesting
anonymity as he is not authorised to speak to media.
    "A significant fall in iron ore prices may need an obvious
reduction in hot metal output." 
    Hot metal is a blast furnace product and a key indicator of
ore demand.
    "Fujian is not a big steel producer and we are looking at
how much exactly hot metal output will be cut," said a
Singapore-based trader.
    While higher-than-expected output underpinned prices last
Friday, analysts at Huatai Futures believe room for a further
increase will be limited amid a seasonally slack steel demand. 
    Other steelmaking ingredients on the DCE lost ground, with
coking coal  DJMcv1  and coke  DCJcv1  down 1.04% and 0.96%,
respectively.
    Steel benchmarks on the Shanghai Futures Exchange were
mixed. Rebar  SRBcv1  was flat, hot-rolled coil  SHHCcv1  rose
0.24%, wire rod  SWRcv1  edged up 0.36% while stainless steel
 SHSScv1  lost 0.22%.
 
 ($1 = 7.2557 Chinese yuan)

 (Reporting by Amy Lv and Mei Mei Chu; Editing by Sohini Goswami
and Savio D'Souza)
 ((Amy.Lv@thomsonreuters.com;))