China's iron ore hits record high on way to best week in over 4 mths

Valecha Engineering

14/06/2019 04:33

* Red-hot rally underpinned by supply, demand outlook 
    * Dalian iron ore boosts 2019 gain to around 80% 
    * Iron ore is 2019 top gainer in China ferrous complex 

    By Enrico Dela Cruz
    MANILA, June 14 (Reuters) - Dalian iron ore benchmark surged
to a record in early trade on Friday and was headed for its best
week since February, buoyed by expectations of sustained
tightness in supply and brisk demand amid China's renewed drive
to support its economy. 
    The most-actively traded September iron ore contract on the
Dalian Commodity Exchange  DCIOcv1  rose as much as 3.9% to 796
yuan ($115) a tonne, on course to end the week with a gain of
around 12%. That was the highest mark for the Chinese benchmark
since Dalian iron ore futures started trading in 2013. 
    Some analysts say there is still no end in sight to the
steel raw material's red-hot rally that began shortly after the
catastrophic collapse of a tailings dam of miner Vale SA
 VALE3.SA  in Brazil in late January.  urn:newsml:reuters.com:*:nL2N23K1U0 
    Safety concerns have prompted closures of other Vale mines
this year as well, reducing supply to top buyer China, which
makes about half of the world's steel.  urn:newsml:reuters.com:*:nL2N22M0QF 
    Imported iron ore inventories at Chinese ports have declined
to 121.6 million tonnes as of last week, the lowest since early
2017, data compiled by SteelHome consultancy showed.
 SH-TOT-IRONINV  
    "Supply losses in Brazil look structural, leaving the market
undersupplied until 2020," ANZ analysts said in a note.
"Attractive steel margins amid stronger infrastructure spending
in China bodes well for demand." 
    On Thursday, China Vice Premier Liu He sought increased
support for the economy and ample liquidity in the financial
system, suggesting Beijing would soon unveil more policies to
bolster growth amid rising U.S. trade pressure.  urn:newsml:reuters.com:*:nL4N23K0UK 
    "China has a firm policy to maintain growth, almost at any
cost," analysts at SP Angel in London said in a note. Beijing is
ramping up stimulus to support the economy hit by United States'
anti-dumping measures and higher tariffs, they said. 
    Spot iron ore prices have also resumed their climb, with the
benchmark 62% grade for delivery to China  SH-CCN-IRNOR62 
hovering near a five-year high at $107.50 a tonne on Thursday,
up from $104.50 the previous day. 
    The rest of China's ferrous complex was mixed on Friday,
with other steelmaking raw materials lower while steel futures
edged higher. 
    Coking coal  DJMcv1  was down 0.3% at 1,397 yuan a tonne as
of 0251 GMT. Coke  DCJcv1  slipped 0.6% to 2,122 yuan. 
    The most-actively traded October construction steel rebar
contract on the Shanghai Futures Exchange  SRBcv1  was up 0.2%
at 3,782 yuan a tonne. Hot rolled coil  SHHCcv1 , used in cars
and home appliances, gained 0.6% to 3,644 yuan a tonne. 
    
    ($1 = 6.9226 yuan)     

 (Reporting by Enrico dela Cruz; Editing by Tom Hogue)
 ((enrico.delacruz@tr.com; +632 841-8934; Reuters Messaging:
enrico.delacruz.thomsonreuters.com@reuters.net))