Iron ore rises as China restricts some Fortescue cargoes

Fortescue

Today 08:23

Updates prices to market close
By Emily Ou Yong

    SINGAPORE, July 2 (Reuters) - Iron ore futures rose on Thursday, after China moved to restrict deliveries of certain Fortescue FMG.AX products to some local steel mills, tightening supply in the world's largest market for the steelmaking ingredient.
The most-traded September iron ore contract on China's Dalian Commodity Exchange (DCE) DCIOcv1 was 0.48% higher at 740 yuan ($109.01) a metric ton.
The benchmark August iron ore SZZFQ6 on the Singapore Exchange was up 0.89% at $98.40 a ton.
State-run iron ore buyer China Mineral Resources Group has notified some mills verbally that from July 15 they must not take delivery of portside cargoes of Fortescue's Super Special Fines and Fortune Fines, both of which are lower-grade iron ore products, five sources with knowledge of the matter said.
Stocks of Fortescue's Super Special Fines at some major Chinese ports stood at 7.22 million tons, as of June 30, said a separate trader on condition of anonymity.
That represents nearly 5% of total portside iron ore stocks, according to a Reuters calculation based on data from consultancy Steelhome SH-TOT-IRONINV.
Lower shipping costs, however, capped gains in iron ore prices on Thursday. 
Oil prices dropped about 1%, down for a third consecutive day, after Qatar said Iran and the U.S. had made progress in indirect talks focused on the Strait of Hormuz, which handled one-fifth of global oil supply before the war. O/R
Other steelmaking ingredients on the DCE were mixed, with coking coal DJMcv1 up 0.2% and coke DCJcv1 down 0.96%.
Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar SRBcv1 fell 0.2%, hot-rolled coil SHHCcv1 declined 0.33%, and stainless steel SHSScv1 shed 0.72%. Wire rod SWRcv1 rose 0.24%.

($1 = 6.7885 Chinese yuan)

 (Reporting by Emily Ou Yong; Editing by Subhranshu Sahu and Ronojoy Mazumdar)
 ((emily.ouyong@thomsonreuters.com;))