Iron ore rose on China’s proposal to cut port costs
Iron ore futures rose on Tuesday as China’s proposed port fee cuts are expected to discourage long-term stockpiling.
The most traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) TIO1! rose 0.51% to 794 yuan ($111.90) per metric ton.
December’s benchmark iron ore price (SZZFZ5) on the Singapore Exchange rose 0.59% to $105.65 per tonne at 0709 GMT.
China has proposed lowering port fees for state-owned companies holding cargoes under 30 days, a move ANZ analysts say would discourage long-term stockpiling and speed up inventory turnover, possibly tightening spot supply during the restocking period.
Analysts at Chinese broker Galaxy Futures said a structural shortage of PB (Pilbara Blend) iron ore fines would support steel prices in the short term, but a rapid decline in domestic demand would likely weigh on iron ore prices in the medium term.
China’s steel prices are likely to remain under pressure for the foreseeable future as demand slows in winter and finished steel inventories remain high, the China Iron & Steel Association said in its latest monthly report.
Sentiments on Tuesday were also strengthened when US President Donald Trump said relations with China were “very strong” following a phone call with Chinese leader Xi Jinping, weeks after a meeting in South Korea where they agreed a framework for a pending trade deal.
Another steelmaking ingredient in DCE is mixed with NYMEX:ACT1 coking coal! down 1% and coke (DCJcv1) up 0.98%.
The modest increase in coke production from China’s Shanxi province, China’s largest coke production hub, was driven by higher margins from cheaper coking coal, consultancy Mysteel said.
Steel benchmarks on the Shanghai Futures Exchange rose. Rebar RBF1! up 0.71%, hot rolled coil EHR1! up 0.64%, wire rod (SWRcv1) up 0.36% and stainless steel HRC1! up 0.65%.
Source: Reuters
