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Asia's iron ore benchmarks set for fifth weekly rise as steel hits record peaks

Published 23/04/2021, 01:19 pm
© Reuters.

* Dalian iron ore virtually flat, SGX iron ore slips 0.1%

* Spot iron ore eases from decade high but still above $180/T

* Shanghai steel futures extend rally

By Enrico Dela Cruz

April 23 (Reuters) - Iron ore futures in Asia were little changed on Friday after spot prices pulled back from decade highs, as market participants were monitoring how quick China's steel mills will be able to destock after ramping up output recently.

However, the steelmaking raw material headed for its fifth straight week of gains, after Chinese steel prices vaulted to record peaks, propelled by anti-pollution output curbs in the world's top steel producer as well as by strengthening global steel demand.

September iron ore on China's Dalian Commodity Exchange DCIOcv1 was virtually flat at 1,091 yuan a tonne by 0256 GMT. The most-active contract has risen nearly 4% this week.

Iron ore's front-month May contract on the Singapore Exchange SZZFK1 slipped 0.1% to $178.75 a tonne.

Steel prices on the Shanghai Futures Exchange also edged higher, with construction steel rebar SRBcv1 up 0.5%, while hot-rolled coil SHHCcv1 , used in car bodies and home appliances, added 0.1%.

"This is a classic bull-market cycle for steel," analysts at J.P. Morgan said in a note. "As the world ex-China emerges from the pandemic and reacts to stimulus measures, demand is recovering at a fast pace."

That also bodes well for China, which is also the world's top exporter of steel materials and steel-based products.

Talks about further steel production curbs in China also caused steel prices to skyrocket in Asia, with hot-rolled coil soaring to as high as $900 a tonne, J.P. Morgan analysts said.

Elevated steel prices and strong demand have boosted profit margins for Chinese mills, prompting them to ramp up output and purchases of iron ore.

Spot iron ore in China traded at $187 a tonne on Thursday for the benchmark 62% Fe grade, easing from Wednesday's decade-high $188.50, based on SteelHome consultancy data. SH-CCN-IRNOR62 '

Shanghai stainless steel SHSScv1 climbed 0.3%.

Dalian coking coal DJMcv1 slipped 0.1%, while coke DCJcv1 was nearly flat.

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