Iron ore rebounds as investors book profit on latest China steel control talks
BEIJING, June 18 (Reuters) -Iron ore futuresprices rebounded on Tuesday due to some profit-taking activities following market talks of steel output control in the southern province of Fujian in top consumer China.
The most-traded September iron ore contract on China's Dalian Commodity Exchange (DCE) DCIOcv1 ended morning trade 1.59% higher at 831.5 yuan ($114.60) a metric ton.
The benchmark July iron ore <SZZFN4> on the Singapore Exchange jumped 2.76% to $108.1 a ton, as of 0353GMT.
Talks circulated that authorities in Fujian held a meeting on Monday with local steelmakers to discuss details about outputrestrictions this year, requiring local state-run manufacturers not to exceed 85% of approved steel capacity before the meeting.
The provincial department of industry and information technology did not immediately respond to a Reuters fax request for comment.
Crude steel output in Fujian province climbed by 6.5%year-on-year to approximately 34.06 million tons in 2023, accounting for 3.3%of the country's total, data from the National Bureau of Statistics showed.
"The news of crude steel control had already been priced in, so some traders closed certain short positions following the latest talks," said a north China-based trader, requesting anonymity as he is not authorised to speak to media.
"A significant fall in iron ore prices may need an obvious reduction in hot metal output."
Hot metal is a blast furnace product and a key indicator of ore demand.
While a higher-than-expected hot metal output underpinned ore prices last Friday, analysts at Huatai Futures believe room for a further increase will be limited amid a seasonally slack steel demand.
Other steelmaking ingredients on the DCE ticked down, with coking coal DJMcv1 and coke DCJcv1 losing 0.15% and 0.02%, respectively.
Steel benchmarks on the Shanghai Futures Exchange advanced. Rebar SRBcv1 added 0.66%, hot-rolled coil SHHCcv1 rose 0.63%, wire rod SWRcv1 edged up 0.34% and stainless steel SHSScv1 climbed 0.14%.
($1 = 7.2555 Chinese yuan)
Reporting by Amy Lv and Mei Mei Chu; Editing by Sohini Goswami
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