Iron ore pushes higher on China's demand

MANILA: Iron ore futures edged higher in see-saw trade on Wednesday, with both Singapore and Dalian benchmarks reversing early losses, supported by strong Chinese demand for the steelmaking ingredient and worries about supply. Iron ore on China's Dalian Commodity Exchange closed the day 0.4% higher at 888 yuan ($127.72) a tonne, adding to solid gains that helped push spot prices to 12-month highs.

The Singapore Exchange's benchmark price was up 0.1% at $111.75 a tonne in afternoon trade, extending gains into a seventh session. "Higher steel prices have encouraged steel mills to keep their output elevated, sustaining iron ore demand. Meanwhile, effective iron ore supply is limited," said Richard Lu, senior analyst at CRU Group in Beijing.

Iron ore arrivals at Chinese ports and shipments from Australia and Brazil declined last week, according to some industry data. Slow offloading process involving iron ore cargoes at ports is adding to supply constraints, Lu said.

Benchmark 62% iron ore's spot price jumped to a fresh 12-month high at $116.50 a tonne on Tuesday, SteelHome consultancy data showed. Stainless steel on the Shanghai Futures Exchange outperformed with a 2.7% gain, advancing for the fifth session on concerns over supply of nickel ore, used to produce nickel pig iron, a raw material for stainless steel.

"If China's nickel ore port inventory fails to rise enough in the third quarter, then after the Philippines enters the rainy season, the domestic nickel ore shortage may be more serious," Huatai Futures Co Ltd analysts said in a note. Key supplier Philippines usually halts mining and shipping operations from the third quarter until the first quarter of the following year due to unfavourable weather.