August 18, 2017 / 8:37 AM / 3 years ago

UPDATE 1-China iron ore futures rise for eighth week as demand for high-grade ore surges

* Dalian iron ore jumps nearly 7 pct, rebar up 2.6 pct

* Limited high-grade iron ore supply at China’s ports -trader

* Spot iron ore on track for sixth straight weekly gain (Updates prices, adds coal mines shut, coking coal price)

By Manolo Serapio Jr

MANILA, Aug 18 (Reuters) - China’s iron ore futures soared nearly 7 percent on Friday, with steelmakers eyeing high-grade ore to boost output and continue cashing in on firm demand for the building material in the world’s top producer.

The steelmaking raw material outpaced gains in rebar steel which rose almost 3 percent to move closer to last week’s 4-1/2-year peak.

“It’s a little hard to buy high-grade iron ore at the ports,” said an iron ore trader in China’s port city of Rizhao.

“Supply is still the same as in the past month, but the demand for high-grade is increasing.”

The most-traded iron ore on the Dalian Commodity Exchange closed 6.6 percent higher at 580.50 yuan ($87) a tonne, adding to a nearly 6 percent spike on Thursday. The contract rose for an eighth straight week, gaining 1.4 percent.

Stockpiles of imported iron ore at China’s ports dropped to 135.2 million tonnes on Friday from 137 million tonnes last week, according to data tracked by SteelHome. SH-TOT-IRONINV

While not far below the record 141.45 million tonnes reached in June, only about one-fifth of that inventory is comprised of the high-quality Australian iron ore fines that many Chinese mills prefer, said the Rizhao-based trader.

Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB jumped 3.3 percent to $75.41 a tonne on Thursday, according to Metal Bulletin. The spot benchmark was up slightly for the week, and was on course for a sixth consecutive weekly increase.

The most-active rebar on the Shanghai Futures Exchange rose 2.6 percent to settle at 3,895 yuan a tonne.

The construction steel product has retreated from last week’s 4-1/2-year peak of 4,016 yuan a tonne as the Shanghai bourse increased trading charges to tame speculative trading.

But falling steel inventories held by Chinese traders show demand remained firm.

Stockpiles of rebar stood at 3.78 million tonnes as of Aug. 11, less than half of this year’s peak of 8.4 million tonnes reached in February, according to SteelHome consultancy. SH-TOT-RBARINV

Coking coal, another steelmaking ingredient, surged 4.4 percent to end at 1,482.50 yuan per tonne on the Dalian exchange . It touched a record high of 1,488.50 yuan earlier in the session.

Coking coal has gained more than 60 percent from this year’s low, with prices getting a further boost as coal mines in areas of Shanxi province - one of China’s top coal producing regions - were ordered shut for safety checks following a fatal landslide a week ago.

$1 = 6.6775 Chinese yuan Reporting by Manolo Serapio Jr.; Editing by Joseph Radford and Christian Schmollinger

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