Iron ore futures prices rose for a second straight session on Wednesday, aided by a wave of buying in the spot market in top consumer China, although gains were capped by high portside stocks and seasonally weak steel demand.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) Â was up 0.75% at 805 yuan ($US110.79) a metric ton, as of 1:30pm AEST.
The benchmark July iron ore on the Singapore Exchange was 0.78% higher at $US103.85 a ton.
Near-term demand for the key steelmaking ingredient stayed solid, partly because iron ore is more cost competitive than steel scrap, another steelmaking input.
Iron ore transaction volumes at major ports climbed by 9.32% from Monday to around 1.09 million tons on Tuesday, data from consultancy Mysteel showed.
“Prices (of iron ore) are consolidating within a limited range, which might also be seen in coming days as there is currently no clear direction,” said Xie Qingwei, an analyst at consultancy Shanghai Metals Market.
“There is no new macro economic stimulus in the short term, while relatively high hot metal output supported near-term ore demand.”
Daily crude steel output among member steelmakers dropped 2.81% from the previous 10-day period to about 2.19 million tons between June 11 and June 20, data from the China Iron and Steel Association showed.
Some electric-arc-furnace-based steelmakers scaled down production after losses widened, partly contributing to lower crude steel output, said analysts.
A survey by Mysteel showed that the start of some new projects has been constrained by a lack of capital as the special bonds issued recently are mainly used for repaying old debts.
Other steelmaking ingredients on the DCE advanced, with coking coal and coke up 2.05% and 1.72%, respectively.
Most steel benchmarks on the Shanghai Futures Exchange recorded marginal gains. Rebar added 0.17%, wire rod ticked up 0.11%, stainless steel rose 0.18%, while hot-rolled coil was little changed.
