Dalian iron ore futures rose on Tuesday for a second straight session to a two-week high thanks to resilient near-term demand in top consumer China, although profit-booking amid a narrowing basis limited some gains.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) closed daytime trade 1.41 per cent higher at 792 yuan ($111.35) a metric ton, its highest since November 3. The contract had also hit a two-week high on Monday.
The benchmark December iron ore on the Singapore Exchange was little changed at $104.4 a ton, as of 0758 GMT, following a gain of more than 1 per cent the day before.
Underpinning prices was resilient demand in the near term, with some mills resuming production after equipment maintenance, two analysts and one trader said.
“Spot liquidity was quite lukewarm, weighing on sentiment,” a Singapore-based trader said.
Transaction volumes for seaborne cargoes and portside cargoes slid by 25.8 per cent and 24.3 per cent from the previous session, respectively, on Monday, data from consultancy Mysteel showed.
Higher prices dented mills’ buying appetite, as industrial participants remained bearish about the price trend amid rising inventories and expectations of seasonally weakening steel demand, said a Shanghai-based analyst.
Also, the upside momentum receded due to a narrowing basis, the difference between spot and futures prices, the Singapore-based trader said.
Narrowing gap between spot and futures prices also lent support to futures prices, which had fallen at a more rapid pace than the spot market earlier this month.
The analysts and traders requested anonymity as they are not authorised to speak to media.
Coking coal and coke, other steelmaking ingredients, slipped 3.86 per cent and 2.86 per cent, respectively.
Most steel benchmarks on the Shanghai Futures Exchange gained ground. Rebar added 0.46 per cent, hot-rolled coil ticked up 0.21 per cent, wire rod advanced 0.12 per cent, while stainless steel lost 0.12 per cent.
