BEIJING: Dalian iron ore futures gained for a second straight session on Tuesday, supported by pre-holiday restocking by steelmakers in top consumer China, although fresh environmental restrictions in the northern region capped the gains.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) rose 0.19% to 774.5 yuan ($106.12) a metric ton by 0242 GMT.
The benchmark January iron ore on the Singapore Exchange was, however, 0.58% lower at $100.7 a ton, as of 0245 GMT, after falling to $99.9 a ton earlier in the session.
“Winter restocking of iron ore among steel mills is still underway, so we believe ore prices will find some support in the near term and destocking at ports will likely continue until end-January,” said Jiang Mengtian, a Shanghai-based analyst at consultancy Horizon Insights.
“We peg the support level at 760 yuan and 770 yuan a ton and the resistance level at 810 yuan a ton.”
Chinese steelmakers usually build up stocks ahead of the Chinese New Year, which starts from Jan. 28, to meet production needs during and after the holiday break.
A few cities in northern China, including steel production hub Handan, announced emergency response from Monday amid forecast air pollution, according to consultancies Lange Steel and Mysteel.
This pressured the key steelmaking ingredient earlier in the session, said analysts. Local steel mills are typically required to curb production under such emergency actions.
Iron ore rises on expectations of Chinese pre-holiday restocking
Other steelmaking ingredients on the DCE lost ground, with coking coal and coke down 1.81% and 0.84%, respectively.
Most steel benchmarks on the Shanghai Futures Exchange advanced.
Rebar ticked 0.24% higher, hot-rolled coil edged up 0.09%, stainless steel strengthened 0.81%, while wire rod shed 0.31%.
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