China iron ore futures hit upward daily limit as mills restock
Source: www.chinamining.org Citation: Reuters Date: April 27, 2015
Chinese iron ore futures rose for a third straight day to hit their upward daily limit on Friday and were on track for a second weekly gain as mills in the world`s top buyer stepped up buying.
Benchmark iron ore futures for September settlement on the Dalian Commodity Exchange surged 4 percent to 417.5 yuan ($67) before trading at 416.5 yuan at 0305 GMT.
"I think the market has been overbearish earlier. Some Chinese steel mills need to pick up purchases of the raw material as their inventories are quite low," said Xia Junyan, an analyst with Everbright Futures in Shanghai.
Iron ore inventories at main Chinese ports dropped 600,000 tonnes on a week earlier to 93.61 million tonnes as of Friday, data from industry consultancy Umetal.com said.
However, some analysts doubt the rally will be sustainable as top miners are still expanding production and steel demand in China remains sluggish.
Some speculators who bet on falling iron ore prices might be forced to cover their short positions for the May contract , which jumped 3 percent on Friday. And the rally helped lift the benchmark contract, analysts said.
Separately, the most-traded rebar futures on the Shanghai Futures Exchange hit a session high of 2,388 yuan, its highest since April 2, as some investors bet on improving demand. The price was up 2.5 percent to 2,379 yuan at 0305 GMT.
"Steel mills are ramping up production by taking advantage of the previous slump in iron ore prices, but steel demand hasn`t recovered much, which will pressure the market," said Xu Huimin, an analyst with Huatai Greatwall Futures in Shanghai.
Iron ore for immediate delivery to China`s Tianjin port jumped 1.7 percent to $53.80 a tonne on Thursday, its highest since March 27, according to The Steel Index.
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