SINGAPORE: Dalian iron ore futures edged lower on Tuesday, reacting to declines in Singapore iron ore prices during the Lunar New Year break, although expectations of rising production and reduced shipments are seen lending support to prices.
The most-active May iron ore contract on China’s Dalian Commodity Exchange (DCE) was down 1.19% at 745 yuan ($108.03) per metric ton as of 0319 GMT.
Meanwhile, the benchmark March iron ore contract on the Singapore Exchange rose 0.89% to $96.7 a ton.
Trading on the DCE and the Shanghai Futures Exchange (SHFE) was suspended from February 16 to February 23 for the Lunar New Year holiday, while the Singapore Exchange remained open. During that period, the benchmark Singapore iron ore contract declined 1.42% last week.
According to Atilla Widnell, managing director at Navigate Commodities, Dalian prices are adjusting in line with last week’s movement in Singapore iron ore prices.
By contrast, Monday’s gains in Singapore iron ore reflect the return of Chinese liquidity to the market.
“While the return of Chinese liquidity post-Lunar New Year has certainly played its part, the market is responding positively to blast furnace ramp-ups across China,” he added.
Data from Mysteel showed iron ore arrivals at 47 Chinese ports fell by 1.7 million tons week-on-week, helping underpin prices. A note from Shanghai Metals Market said trading activity is likely to pick up gradually, with spot prices expected to stay firm as downstream steel demand rebounds.
Other steelmaking materials on the DCE also declined, with coking coal and coke falling 1.52% and 2.18%, respectively. Steel futures on the SHFE showed mixed performance: rebar dropped 0.75% and hot-rolled coil fell 0.71%.
However, wire rod rose 0.51%, while stainless steel gained 0.51%.
