MANILA, Sept 9 (Reuters) – Iron ore futures in Dalian and Singapore fell in early trade on Monday after data showed China’s imports of the steelmaking raw material rose in August to a 19-month high, the latest evidence of a continued rebound from recent supply-side issues.
China’s iron ore purchases last month totalled 94.85 million tonnes, up 4.2% from 91.02 million tonnes in July, customs data showed, marking the highest level of imports since January 2018.
The most-traded iron ore on the Dalian Commodity Exchange , for delivery in January 2020, slumped as much as 3.6% to 621 yuan a tonne. It was down 1.4% by 0233 GMT.
On the Singapore Exchange, the front-month October contract dropped as much as 1.1% to $85.04 a tonne. China’s iron ore imports rebounded 21% in July as shipments grew from big miners in Australia and Brazil, pushing inventory of imported iron ore at Chinese ports to 125.25 million tonnes by the end of August, according to data compiled by SteelHome consultancy. SH-TOT-IRONINV
Iron ore port stocks at the end of June hit the lowest since January 2017 amid disruptions in supply from Brazil and Australia, boosting spot prices to five-year peaks at a time steel mills’ demand for the material remained robust.
“This (continued rebound in iron ore supply to China) seemed to suppress any bullishness from China’s move to cut rates,” ANZ Research said in a note. Steel futures rose, however.
China’s central bank said on Friday it would cut the amount of cash that banks must hold as reserves for the third time this year, releasing 900 billion yuan in liquidity to shore up the flagging economy.
“We remain cautious about iron ore prices going into September in light of the still-uncertain trade outlook, the general malaise still plaguing large swathes of China’s industrial economy and a steadily-improving supply picture, but we don’t see as drastic a fall as what we saw in August,” said Edward Meir, commodity consultant at brokerage INTL FCStone in London.
FUNDAMENTALS
Benchmark spot 62% iron ore for delivery to China, SH-CCN-IRNOR62 stood at $91 a tonne on Friday, according to data tracked by SteelHome consultancy. The most-active construction steel rebar contract on the Shanghai Futures Exchange rose as much as 1.3% to 3,463 yuan a tonne. Hot rolled coil, the steel used in cars and home appliances, jumped 1.9% to 3,496 yuan.
Other steelmaking raw materials also advanced, with coking coal up 0.3% at 1,333 yuan a tonne and coke gaining 1.3% to 1,948 yuan.