By Enrico Dela Cruz
(Reuters) – Chinese iron ore futures rose on Monday, supported by supply concerns and shrinking portside inventories of the steelmaking ingredient, while the easing of some COVID-19 curbs in the world’s top steel producer also lifted trader sentiment.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange ended the morning trade 1.1% higher at 812.50 yuan ($119.64) a tonne, rebounding after posting its biggest weekly loss in nearly three months on Friday.
On the Singapore Exchange (OTC:), the most-active June contract, however, dropped 1% to $125.95 a tonne.
“Falling Australian and Brazilian iron ore shipments and arrivals into China week-on-week should provide modest support for fragile sentiment,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.
Iron ore and other steelmaking inputs were also supported following reports that Shanghai will gradually reopen for business following weeks of lockdowns, Widnell said.
Dalian coking coal rose 3.5% and coke climbed 2.6%.
Shanghai set out plans on Monday for the return of more normal life from June 1 and the end of a painful COVID-19 lockdown that has lasted more than six weeks and contributed to a sharp slowdown in China’s economic activity.
In Beijing, authorities have extended guidance to work from home in four districts, but have not enforced a city-wide lockdown.
“Robust blast furnace capacity utilization rates and daily (iron ore) offtakes, and depleting portside inventories should all provide support,” Widnell said.
Iron ore port inventories in China stood at 141.75 million tonnes, as of May 13, the lowest since the third week of October, according to data from SteelHome consultancy.
Construction steel rebar on the Shanghai Futures Exchange slipped 0.2%, while hot-rolled coil shed 0.1%. Stainless steel climbed 1.8%.
China’s crude steel output picked up in April, rising 5.1% from a month earlier as the impact of environmental restrictions and COVID-19 disruptions eased, but it was still well below year-ago levels.