Iron ore prices rose on Monday, as portside inventory in top steel producer China shrank during the Golden Week holidays to the lowest since mid-July, indicating strong demand for the steelmaking ingredient.
Adding to supply concerns, threats of flooding remained in Australia – China’s biggest iron ore supplier – as authorities warned of another intense weather system that could bring more downpours.
The most-active January iron ore contract on the Dalian Commodity Exchange ended daytime trade 2.2% higher at 739.50 yuan ($103.93) a tonne, after touching 744.50 yuan earlier in the session, its highest since Aug. 9.
On the Singapore Exchange, benchmark November iron ore was up 2.2% at $97.70 a tonne, as of 0700 GMT.
Chinese markets were closed for the Golden Week holidays that began on Oct. 1.
Other steelmaking ingredients also advanced, despite news about rising post-holiday covid-19 cases in China and a contraction in the country’s services activity last month.
Dalian coking coal and coke climbed 5.3% and 3.8%, respectively.
On the Shanghai Futures Exchange, rebar rose 1.4%, while hot rolled coil advanced 0.6%. Stainless steel dipped 1.4%.
Imported iron ore stocks at Chinese ports stood at 131.9 million tonnes, as of Monday, declining steadily over the last four weeks, SteelHome consultancy data showed, as steelmakers ramped up output amid increased construction-related demand for steel.
Chinese steel prices are likely to rebound in October with market fundamentals improving and macroeconomic support policies coming into force, Mysteel consultancy said, citing its chief analyst Wang Jianhua.
Caution is likely to prevail, however, ahead of this month’s Chinese Communist Party congress.
“The National Party Congress is set to commence in less than a week, with traders eagerly watching any and all policy announcements around the critical event,” Westpac analysts said in a note.
(By Enrico Dela Cruz; Editing by Subhranshu Sahu)