Iron ore rebounds as investors book profit on latest China steel control talks

China Steel

18/06/2024 05:16

BEIJING, June 18 (Reuters) - Iron ore futures prices
rebounded on Tuesday due to some profit-taking activities
following market talks of steel output control 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  ended morning trade
1.59% higher at 831.5 yuan ($114.60) a metric ton.
    The benchmark July iron ore  SZZFN4  on the Singapore
Exchange jumped 2.76% to $108.1 a ton, as of 0353 GMT. 
    Talks circulated that authorities in Fujian held a meeting
on Monday with local steelmakers 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 request
for 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.
    While a higher-than-expected hot metal output underpinned
ore 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 ticked down, with
coking coal  DJMcv1  and coke  DCJcv1  losing 0.15% and 0.02%,
respectively.
    Steel benchmarks on the Shanghai Futures Exchange advanced.
Rebar  SRBcv1  added 0.66%, hot-rolled coil  SHHCcv1  rose
0.63%, wire rod  SWRcv1  edged up 0.34% and stainless steel
 SHSScv1  climbed 0.14%.

($1 = 7.2555 Chinese yuan)

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