SHANGHAI, June 24 Iron ore futures in China
rose more than 3 percent on Wednesday to their highest in a week, buoyed by firm spot prices due to tight
stocks at the country's ports. But a seasonal
slowdown in steel demand over the summer and tumbling spot steel prices are expected
to force steel mills to curb production, hitting demand for raw ingredient iron ore. The most-traded September iron ore
futures contract on the Dalian Commodity Exchange had jumped to a session-peak of 442 yuan ($71.20) a tonne by the
midday break, its highest since June 16.
"Futures are still about 50 yuan a tonne lower than spot prices, so there is upside room. But if
steel mills are cutting output in July and August due to the seasonal decline, iron ore will enter downward territory
again," said Zhou Zhijun, an analyst with Zhongcai Futures in Shanghai.
China's imports of iron ore from Australia and Brazil continued to rise in May despite an
overall decline in shipments. Smaller suppliers in Iran and elsewhere are being squeezed out of supplying the country by
low prices, data from China's customs authority showed.
Some traders expect a decline in supply from high-cost iron ore miners to help offset growing
shipments from top producers Australia and Brazil.
Australia supplied 241.7 million tonnes of iron ore to China for Jan-May, up 14.8 percent compared to
last year and amounting to almost 64 percent of the total. Shipments from Brazil rose 4.2 percent to 70.89
million tonnes.
Shipments to China from Iran declined 48 percent for the first five months of this year, while
those from Indonesia shrunk 71 percent over the period.
Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI dropped for
the third straight session on Tuesday, down 0.2 percent to $60.5 a tonne. It has recovered nearly 30 percent from a low of $46.7 in
early April. Rebar futures for October delivery on the
Shanghai Futures Exchange had inched up 0.2 percent to 2,239 yuan a tonne by midday break.
Source: reuters