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Iron ore hits 1-month high as China port stocks dip

Published 06/08/2015, 02:58 pm
Updated 06/08/2015, 03:06 pm
© Reuters.  Iron ore hits 1-month high as China port stocks dip

* Iron ore stocks at China's ports lowest in nearly a month

* Chinese mills may be lifting output ahead of curbs - ANZ

By Manolo Serapio Jr

MANILA, Aug 6 (Reuters) - Spot iron ore prices rose to one-month highs as inventories of the raw material at Chinese ports dropped, indicating steel producers may be lifting output ahead of curbs later this month before a key event in September.

Stockpiles of iron ore at 44 Chinese ports dropped by 0.5 million tonnes to 81.95 million tonnes as of end-July, according to data tracked by industry consultancy Steelhome. That was the lowest level in almost a month.

"The unseasonal decline in iron ore port stocks in China suggests an increase in steel output before production cuts in September," ANZ Bank analysts said in a note.

Beijing will shut factories to ensure clean air during a commemoration of the 70th anniversary of the end of World War Two on Sept. 3. The controls will be imposed from Aug. 20.

The measures are expected to extend to areas surrounding Beijing including the top steel producing province of Hebei and neighbouring city of Tianjin, industry sources say, following a similar effort last year ahead of a regional summit in November.

Some traders have said mills were likely to produce more steel before the stoppage, helping boost short-term demand for iron ore.

Iron ore for immediate delivery to China's Tianjin port climbed 2.6 percent to $56.40 a tonne on Wednesday, its loftiest since July 1, according to The Steel Index.

The steelmaking raw material has rebounded nearly 28 percent from a decade-low of $44.10 in early July.

Cautious inventory building among Chinese steel mills may be behind the recovery in iron ore prices, Marex Spectron head of research Georgi Slavov said.

"If this effort turns into a full scale restocking non-seasonal industrial cycle, the upside for the iron ore price appears to be much greater than the downside," Slavov said in a note this week.

On Thursday, iron ore for January delivery on the Dalian Commodity Exchange was up 0.8 percent at 375 yuan ($60) a tonne by midday, after matching Wednesday's peak of 378 yuan, its highest since July 6.

Rebar and iron ore prices at 0440 GMT

Contract

Last

Change Pct Change SHFE REBAR JAN6

2082

-11.00

-0.53 DALIAN IRON ORE DCE DCIO JAN6

375

+3.00

+0.81 SGX IRON ORE FUTURES SEP

53.2

+0.33

+0.62 THE STEEL INDEX 62 PCT INDEX

56.4

+1.40

+2.55 METAL BULLETIN INDEX

56.78

+1.49

+2.69

Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day ($1 = 6.2086 Chinese yuan)

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