Dalian iron ore extends rise on strengthening steel prices
BEIJING, Aug 20 (Reuters) -Dalian iron ore climbed for a second straight session on Tuesday, supported by a persistent rise in steel prices in top consumer China, although lingering doubts on 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 traded 0.85% higher at 708 yuan ($99.05) a metric ton, as of 0257 GMT.
The benchmark September iron ore SZZFU4 on the Singapore Exchange was, however, 0.4% lower at $94.25 a ton, following a rally on Monday and a stronger U.S. dollar < =USD>.
Steel benchmarks on the Shanghai Futures Exchange posed further gains, boosting sentiment and supporting prices of key steelmaking raw materials including iron ore.
Rebar SRBcv1 added 1.09%, hot-rolled coil SHHCcv1 advanced 0.82%, wire rod SWRcv1 gained 0.8% and stainless steel SHSScv1 edged up 0.15%.
But analysts doubted the sustainability of a price rise, citing that fundamentals remained unfavourable and a lack of fiscal stimulus has blurred demand prospects in coming months.
Supply pressure of the key steelmaking ingredient has somewhat eased, but there is still no sign of improvement in the demand side and the July data showed downstream steel demand has not improved, 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 0.9% while coke DCJcv1 strengthened 1.73%.
($1 = 7.1480 Chinese yuan)
Reporting by Amy Lv and Mei Mei Chu; Editing by Rashmi Aich
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