WEEKLY: Fundamentals to support iron ore price rebound
Spot iron ore prices firmed last week, primarily driven by a marked technical rebound in Chinese futures of the commodity, Mysteel Global noted.
The most-traded iron ore contract on the Dalian Commodity Exchange for May delivery steadily strengthened last week by a total of 9.3% to reach Yuan 843.5/dmt ($116.5/dmt) when the daytime session closed last Friday.
This rebound mainly stemmed from a shift in investors' sentiment after futures prices emerged from a prolonged trough, Mysteel Global noted from market sources.
Accordingly, Mysteel SEADEX 62% Australian Fines rose by $13.25/dmt from April 7 to land at $111.2/dmt CFR Qingdao on April 12.
As for this week, domestic steel consumption will pick up moderately with the pace of work at construction sites accelerating as more funds have become available, a Shanghai-based ferrous analyst predicted.
Consequently, better steel demand will encourage more mills to ramp up their hot metal production during the rest of this month, though the degree of increase may not be large, she said to explain the support for iron ore prices.
In fact, hot metal output among the 247 Chinese steelmakers Mysteel checks regularly grew for the second week last week by another 0.5% on week to 2.25 million tonnes/day on average over April 4-11.
On the supply side, the source foresaw a further accumulation in China's portside iron ore stocks this week, due to the surge in ore carrier arrivals at ports.
Imported iron ore stocks piled at the 45 major Chinese ports Mysteel monitors rose for a 16th consecutive week last week to total 144.9 million tonnes by April 11 for an on-year gain of 10%.
Written by Lea Li, liye@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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