Iron ore struggles for direction as prospect of China steel output cut weighs (updated)

China Steel

19/06/2024 09:24

(Recasts, adds comments and updates closing prices)
       BEIJING, June 19 (Reuters) - Iron ore futures pared
early gains on Wednesday and struggled for a clear direction, as
market discussions over potential steel production cuts in top
consumer China weighed on prices of the key steelmaking
ingredient.
    The most-traded September iron ore contract on China's
Dalian Commodity Exchange (DCE)  DCIOcv1  closed daytime trade
0.36% lower at 824 yuan ($113.55) a metric ton, after touching
an intra-day high of 835.5 yuan a ton earlier in the session.
    Similarly, the benchmark July iron ore  SZZFN4  on the
Singapore Exchange narrowed gains to trade 0.5% higher to $107 a
ton, as of 0745 GMT, after climbing more than 1%.
    Market talks of output cuts in more regions weighed on
prices in the afternoon trading session, said analysts.
    The market chatter came following a meeting between relevant
authorities in the southern province of Fujian and local
steelmakers on Monday to discuss output restrictions for the
year.
    The Provincial Department of Industry and Information
Technology did not respond to a Reuters fax seeking comment.
    "Except the one for Fujian, we do not see any grounds for
other talks but they did impact price movement to some degree,"
said a Beijing-based analyst, requesting anonymity as he was not
authorised to speak to media.    
    Both benchmarks were earlier supported by a softer U.S.
dollar  =USD  and hopes of sustained short-term demand. 
    "The market lacks confidence in crude steel control this
year, but it has strong expectations on an improved economy in
the second half of the year, which partly explained why iron ore
could be so resilient," Jinrui analysts said in a note.    
    Other steelmaking ingredients on the DCE shed, with coking
coal  DJMcv1  and coke  DCJcv1  down 1% and 0.1%, respectively. 
    Most steel benchmarks on the Shanghai Futures Exchange edged
lower. Rebar  SRBcv1  dipped 0.5%, hot-rolled coil  SHHCcv1 
ticked 0.4% lower, wire rod  SWRcv1  lost 0.5%, while stainless
steel  SHSScv1  gained 0.5%.
    "In theory, steel prices will benefit from talks of steel
cut, but lower raw materials prices also sent downward pressure
to steel," said a North China-based analyst.


 (Reporting by Amy Lv and Mei Mei Chu; Editing by Sherry
Jacob-Phillips)
 ((Amy.Lv@thomsonreuters.com;))