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Iron ore prices rebounded on Friday after touching more than two-year lows the day before, aided by dip buying amid signs of improving steel margins and downstream consumption in top consumer China.
The most-traded iron ore contract on China’s Dalian Commodity Exchange closed daytime trade up 0.07% at 672.5 yuan ($100.57) a metric ton, but posted a weekly loss of 1.5%.
The benchmark November iron ore on the Singapore Exchange was 1.11% higher at $90.85 a ton, as of 0805 GMT. It has gained 0.2% so far this week.
Market sentiment was boosted by slightly improved profitability among steel mills, propelling a flurry of dip buying that led to a temporary “technical rebound”, said analysts.
Around 8% of domestic steelmakers were operating at a profit as of October 15, versus 6.9% the week before, data from consultancy Mysteel showed.
The fall in hot metal output, a gauge of iron ore demand, slowed, indicating that mills will need to restock feedstocks, analysts at broker First Futures said in a note.
But downside risks persisted as portside inventories built up and the demand outlook was vulnerable to low profitability and a slack season ahead.
Coking coal and coke, other steelmaking ingredients, extended losses as supply recovery in major production hubs ramped up, down 1.07% and 0.03%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were rangebound. Rebar ticked up 0.26%, hot-rolled coil nudged up 0.19%, while stainless steel shed 0.38%.
($1 = 6.6868 Chinese yuan)
(Reporting by Amy Lv and Lewis Jackson; Editing by Mrigank Dhaniwala and Subhranshu Sahu)
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