Dalian iron ore stuck in tight range on clouded China demand outlook

Mexan

14/07/2021 05:36

* Signs emerge pointing to tepid Chinese steel demand
    * China's steel exports to top buyer ASEAN countries decline
    * Tight global iron ore supply underpins spot prices 

    By Enrico Dela Cruz
    July 14 (Reuters) - Dalian iron ore futures were trapped in
a tight range while the Singapore benchmark slipped on
Wednesday, pressured by concerns about demand prospects for the
steelmaking raw material in top steel producer China.
    The most-traded September iron ore on China's Dalian
Commodity Exchange  DCIOcv1  eked out a gain of 0.1% to end the
morning session at 1,211 yuan ($187.16) a tonne.
    Iron ore's most-active August contract on the Singapore
Exchange  SZZFQ1  dropped 0.8% to $208.55 a tonne.
    "There are early signs of a turning point in Chinese demand
with falling Chinese steel prices crushing margins for steel
mills," said Justin Smirk, a senior economist at Westpac in
Sydney.
    Declining cement prices in China, some rebar makers possibly
starting to incur losses, and excavator sales in May posting the
first monthly drop since early 2020 point to slowing
construction activity that has also been hampered by an
unfavourable weather, Smirk said.
    China's steel exports also remained weak, hit by tepid
demand in Southeast Asian countries - its largest buyers of the
construction and manufacturing material - due to a fresh wave of
COVID-19 infections in the region, Mysteel consultancy reported.
    Concerns about China's efforts to curb steel output this
year to meet its carbon emissions goal also kept market
participants largely at bay, even as worries persisted over the
tightness in global iron ore supply.
    Iron ore supply constraints, meanwhile, kept spot prices
underpinned, with the support particularly stronger for
high-grade materials, as China's intense emission-control
campaign pushed steel producers to top-quality ore.
    Higher-quality iron ore produces more steel for each tonne
that is processed, and can reduce blast furnace emissions.
    Construction steel rebar on the Shanghai Futures Exchange
 SRBcv1  rose 0.9%, while hot-rolled coil  SHHCcv1  jumped 1.2%.
Stainless steel  SHSScv1  climbed 2.8%.
    Dalian coking coal  DJMcv1  advanced 2.8% and coke  DCJcv1 
gained 1.9%.    

 (Reporting by Enrico Dela Cruz in Manila; Editing by Subhranshu
Sahu)
 ((enrico.delacruz@thomsonsonreuters.com))