Dalian iron ore extends gains on strengthening steel prices
Updates closing prices
By Amy Lv and Mei Mei Chu
BEIJING, Aug 20 (Reuters) -Dalian iron ore climbed on Tuesday, supported by a persistent rise in steel prices in top consumer China, although lingering doubts around demand prospects amid a lack of forceful stimulus capped gains.
The most-traded January iron ore contract on China's Dalian Commodity Exchange (DCE) DCIOcv1 ended daytime trade 1.21% higher at 710.5 yuan ($99.45) a metric ton, rising for a second consecutive session.
The benchmark September iron ore SZZFU4 on the Singapore Exchange, however, slid 1.11% to $93.95 a ton, as of 0712 GMT, following a rally on Monday and a slight recovery in the U.S. dollar =USD.
Most steel benchmarks on the Shanghai Futures Exchange extended gains, boosting sentiment and supporting prices of key steelmaking raw materials like iron ore.
Rebar SRBcv1 added 1.93%, hot-rolled coil SHHCcv1 advanced 1.97%, wire rod SWRcv1 gained 1.21%.
However, analysts were doubtful of the sustainability of the rise in prices, citing that fundamentals remained unfavourable and a lack of fiscal stimulus has blurred demand prospects in coming months.
Supply pressures of iron ore have eased somewhat, but there is still no sign of demand improvement and the July data showed weak downstream steel demand, according to analysts at Galaxy Futures.
"The reduction in ore demand outpaced supply, making it hard to sustain a balance between supply and demand," analysts at Sinosteel Futures said in a note, adding that mills showed more interest in lower grade ore amid thin margins.
China left benchmark lending rates unchanged at a monthly fixing on Tuesday, in line with market expectations.
"Beijing's reluctance to deploy massive fiscal stimulus measures is likely to subdue demand for the foreseeable future," ANZ analysts said in a note.
Other steelmaking ingredients on the DCE were mixed, with coking coal DJMcv1 falling 0.3% while coke DCJcv1 strengthened 2.42%.
Shanghai's stainless steel contract SHSScv1 edged down 0.4%.
($1 = 7.1441 Chinese yuan)
Reporting by Amy Lv and Mei Mei Chu; Editing by Rashmi Aich and Varun H K
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