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Iron ore prices rebounded on Wednesday, supported by short-covering and expectations that steelmakers in top consumer China will begin restocking ahead of the Lunar New Year holiday.
The most-traded iron ore contract on China’s Dalian Commodity Exchange DCIOcv1 closed daytime trade up 1.56% at 682 yuan ($102.01) a metric ton after a 0.7% fall on Tuesday. It earlier touched its highest since October 29 at 685 yuan.
The benchmark December iron ore SZZFZ6 on the Singapore Exchange climbed 1.27% to its strongest since October 29 at $91.85 a ton, as of 0732 GMT.
Steel mills are expected to replenish ore inventories before the Lunar New Year holiday, providing near-term support to prices, analysts at Guoxin Futures said in a note.
Chinese steelmakers typically build seaborne iron ore stocks in the fourth quarter to meet production needs during the weeklong holiday period, which falls in February next year.
“Iron ore fundamentals remained weak, but a level at around $90 a ton created a strong technical support, limiting further downside room,” said Jiang Mengtian, an analyst at consultancy Horizon Insights.
While seaborne ore supply is expected to increase in the fourth quarter, analysts at Macquarie said “lower domestic iron ore output in China has partly offset the impact”.
Coking coal DJMcv1 and coke DCJcv1, other steelmaking ingredients, extended losses on rising supply and subdued demand, down 0.98% and 0.48%, respectively.
Steel benchmarks on the Shanghai Futures Exchange gained ground. Rebar SRBcv1 added 0.2%, stainless steel SHSScv1advanced 0.88%, hot-rolled coil SHHCcv1rose 0.29% and wire rod SWRcv1 gained 1.44%.
($1 = 6.6856 Chinese yuan)
(Reporting by Amy Lv and Lewis Jackson; Editing by Subhranshu Sahu and Jochelle Mendonca)
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