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UPDATE 1-Supply, inflation concerns send China iron ore, steel prices to record high

UPDATE 1-Supply, inflation concerns send China iron ore, steel prices to record high

05/10/2021 05:28
UPDATE 1-Supply, inflation concerns send China iron ore, steel prices to record high

Dalian iron ore, coking coal hit trading limits

Prices of steel rebar, hot rolled coils gain 6%

Iron ore trading departs from fundamentals - analyst

Adds traders' comments, details and chart

By Min Zhang and Shivani Singh

- China's ferrous prices took off on Monday, with benchmark iron ore and steel futures hitting all-time highs amid robust demand and supply concerns, as expectations of rising inflation rates also fuelled speculative buying.

Capacity utilisation rates of blast furnaces at 247 steel mills across China jumped to 90.59% last week, the highest since early March, data from Mysteel consultancy showed.

The most active iron ore futures contract on the Dalian Commodity Exchange DCIOcv1, for September delivery, soared 10% to a record high of 1,326 yuan ($206.30) per tonne.

On the Singapore Exchange, the June iron ore contract SZZFM1 surged 9.5% to $224.65 a tonne.

"Some mills have stopped buying at such high prices, but traders are sweeping up in the spot market," said Wu Shiping, analyst with Tianfeng Futures.

Iron ore prices gained amid falling portside inventories while demand at mills remains strong, said a trader at a state-backed company, declining to be named as he is not authorized to talk to media.

Iron ore stockpiles at Chinese ports SH-TOT-IRONONV fell by 2.05 million tonnes to 131.05 million tonnes, the lowest in almost two months, according to Mysteel.

Spot prices of iron ore with 62% iron content for delivery to China SH-CCN-IRNOR62 stood at $212 per tonne on Friday, data compiled by SteelHome consultancy showed.

"At present, market participants are trading iron ore derivatives like cryptocurrency ... not based on fundamentals, just pure momentum," Navigate Commodities Managing Director Atilla Widnell said.

Dalian coking coal DJMcv1 rose 8% to 2,062 yuan a tonne at close. Coke futures DCJcv1 gained 4.4% to 2,954 yuan.

Steel prices on the Shanghai Futures Exchange and in the spot markets were also supported by the rising material costs.

Billet prices in the Tangshan city steel hub rose by 280 yuan a tonne over the weekend, said a CITIC Securities note.

Meanwhile, a raft of measures by Beijing since Friday tightening controls on steel capacity and production have stoked supply-side worries for the industrial material amid strong downstream consumption. nL1N2MT0IC

Construction steel rebar SRBcv1, for October delivery, rose 6% to 6,012 yuan a tonne, its all-time high. Hot rolled coils SHHCcv1, used in cars and home appliances, also punched its trading limit and ended at a record 6,335 yuan per tonne.

Shanghai stainless steel futures SHSScv1, for June delivery, gained 2.6% to 15,295 yuan per tonne.

"Despite the jump in China's steel prices, the metals are still cheap in the global market," a Tianjin-based trader said.

($1 = 6.4288 yuan)

China iron ore prices hit record highhttps://tmsnrt.rs/3uAdWE4

China steel futures prices hit record highhttps://tmsnrt.rs/3bfn5KJ

(Reporting by Min Zhang and Shivani Singh; Editing by Anil D'Silva and Tom Hogue)

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