Prices of iron ore futures touched a more than two-week high on Tuesday, supported by a U.S.-China temporary trade agreement, although caution over a final deal and potentially slower near-term demand limited gains.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) TIO1! traded 1.56% higher at 718 yuan ($99.82) a metric ton, as of 0245 GMT.
The contract hit its highest since April 24 at 727 yuan earlier in the session.
The benchmark June iron ore (SZZFM5) on the Singapore Exchange, however, dipped 0.45% to $99.55 a ton, after touching its highest since April 24 at $100.35.
The U.S. and China agreed on Monday that the United States would drop levies on Chinese imports from 145% to 30% during a 90-day negotiation period and China would cut duties from 125% to 10%. This boosted investor sentiment and led to a broad price rally across commodities.
But the initial enthusiasm faded amid uncertainties that the countries would reach a final deal and on seasonally slow demand, prompting concerns that ore demand may be sluggish in the coming weeks.
It’s expected that hot metal output will likely show signs of softening in mid-to-late May, analysts at Shengda Futures said in a note.
Lower hot metal output is expected to coincide with miners ramping up shipments to achieve quarterly targets, adding to the downward pressure on prices, according to analysts at CICC 601995.
Hot metal output is a blast furnace product and is typically used to gauge iron ore demand.
Steel benchmarks on the Shanghai Futures Exchange advanced on Tuesday. Rebar RBF1! rose 1.11%, hot-rolled coil EHR1! added 1%, wire rod (SWRcv1) climbed 1.15% and stainless steel HRC1! edged up 0.43%.
Other steelmaking ingredients on the DCE, however, were dragged down by soft fundamentals, with coking coal NYMEX:ACT1! and coke (DCJcv1) down 0.74% and 0.62%, respectively.
Source: Reuters
