SHANGHAI, Sept 3: Iron rose for the first session in four as Chinese steelmakers ramped up production amid a strong consumption season, boosting appetite for the raw material.
The stabilising Chinese economy and Beijing’s plan to beef up investment in construction and infrastructure projects would lift steel demand in the world’s biggest producer and consumer.
Chinese steelmakers have planned to maintain higher running rates in expectation of improving orders in September as more construction activities are picking up, which will push them to restock iron ore.
‘Iron ore prices are likely to sustain the gains in coming two weeks as steel demand remains intact and mills will need to continue buying the raw material,’ said an iron ore trader in Tangshan city of northern China’s Hebei province.
Some mills are slowing purchases after heavy restocking drove up iron ore prices by 6 percent in August, the third monthly gain, while the mills are still running at the maximum utilization rate, traders said.
‘Mills and traders are in a stalemate as mills are finding it difficult to accept rising prices while traders refuse to drop offers, but prices should not fall as mills have to restock if they don’t cut output,’ said an iron ore trader in Beijing.
Iron ore swaps cleared by the Singapore Exchange <0#SGXIOS:> rose across the board on Monday, with the most-traded October contract rising $1.47 to $133.59 a tonne.
Global miner Rio Tinto is selling a cargo of 165,000-tonnes of Pilbara fines with 62-percent iron grade on a tender to be closed this afternoon, and traders are watching for clues on pricing this week, traders said.
Iron ore with 62 percent grade <.IO62-CNI=SI> rebounded 0.7 percent to $138.7 a tonne on Monday, according to data from the Steel Index.
Rebar futures for January settlement on the Shanghai Futures Exchange fell 0.7 percent to 3,757 yuan ($610) a tonne by midday break, but losses were capped amid firm demand. It gained for the three consecutive months from June. Shanghai rebar futures and iron ore indexes at 0336 GMT
(AGENCIES)
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