Iron ore gains on firm near-term demand, more China rate cuts
BEIJING, Oct 21 (Reuters) -Prices of iron ore futures rose on Monday as near-term demand remained firm and the latest rate cut in top consumer China lifted sentiment, but gains were capped by a lingering caution on exactly how much boost the steel market will have.
The most-traded January iron ore contract on China's Dalian Commodity Exchange (DCE) DCIOcv1 traded 1.52% higher at 770 yuan ($108.40) a metric ton, as of 0207 GMT.
The benchmark November iron ore <SZZFX4> on the Singapore Exchange climbed 0.95% to $102.65 a ton.
Near-term demand for the key steelmaking raw material held firm thanks to improved steel margins, said analysts.
The daily average hot metal output among steelmakers surveyed gained for a seventh straight week, rising 0.5% on the week to 2.34 million tons as of Oct. 18, the highest since early August, while profitability climbed for the eighth consecutive week to 74.46%, data from consultancy Mysteel showed.
Meanwhile, China cut benchmark lending rates at the monthly fixing on Monday, boosting the market, after trimming other policy rates last month as part of a package of stimulus measures to revive the economy.
Price gains, however, were capped by lingering doubts on any quick boost in iron ore and steel demand from the raft of stimulus measures in the world's second-largest economy since late September.
"While the focus on reducing inventory is likely to speed up the recovery, it will have little impact on steel and iron demand in the short term," analysts at ANZ said in a note.
Other steelmaking ingredients on the DCE gained ground, with coking coal DJMcv1 and coke DCJcv1 adding 0.56% and 0.53%, respectively.
Steel benchmarks on the Shanghai Futures Exchange advanced. Rebar SRBcv1 rose 1.08%, hot-rolled coil SHHCcv1 added 1.06%, wire rod SWRcv1 climbed 1.1% and stainless steel SHSScv1 edged up 0.65%.
($1 = 7.1035 Chinese yuan)
Reporting by Amy Lv and Mei Mei Chu; Editing by Sumana Nandy
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