Iron ore rises on strong China steel demand, production curbs
The most-traded September iron ore contract on China's
Dalian Commodity Exchange
(DCE) rose 1.81 per cent to 785.5 yuan ($109.39) a metric ton.
The benchmark August iron ore on the Singapore Exchange was 0.86 per cent higher at $100.8 a ton by 0713 GMT.
Steel production has rebounded in China, driven by accelerating accumulation of building materials, robust manufacturing demand and sustained strength in steel exports, broker Galaxy Futures said.
Key steel producing regions Shanxi and Tangshan have started implementing output restrictions, Galaxy said.
Although it is the off-season for steel products, there has been increased demand for steel, while some blast furnaces are approaching mid-year maintenance, said broker Hexun Futures.
Iron ore shipments from top suppliers Australia and Brazil have fallen after a ramp-up by the end of the past quarter, analysts said.
Rio Tinto posted its highest second-quarter iron ore output since 2018, but shipments missed analyst forecasts and hit their lowest for the half since 2014 due to weather-related disruptions.
Improving mill margins are starting to boost optimism around demand, ANZ analysts said.
Meanwhile, BHP said the costs of establishing a "green iron" industry in Australia remained too high, even as Australia and China reached an agreement this week to collaborate on steel supply chain decarbonisation.
Australia, which supplies 60 per cent of China's iron ore needs, produces lower-grade iron ore, which cannot be directly processed into steel with renewable energy.
Other steelmaking ingredients on the DCE rose, with coking coal and coke up 1.55 per cent and 1%, respectively.
All steel benchmarks on the Shanghai Futures Exchange gained ground. Rebar gained 0.8 per cent, hot-rolled coil climbed 1.23%, wire rod rose 0.86 per cent and stainless steel firmed 0.32 per cent.
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