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China iron ore rallies again as investors' appetite for steel returns
Reuters Reuters
Tuesday June 27, 2017 11:57 PM
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BEIJING, June 28 (Reuters) - China's iron ore rallied more than 3 percent on Wednesday, hitting its highest in a month and extending recent gains as investors piled into the market ahead of the quarter end and on a revival in appetite for bulk commodities.
Steel rebar rose as much as 3.2 percent and was on track for its best daily performance in more than a month.
Anlysts said the buying spree followed on from reassurances in a speech by Chinese Premier Li Keqiang on the state of the Chinese economy and industrial profit data on Tuesday. Those factors and some end-of-quarter window dressing had triggered a late afternoon surge in prices on Tuesday.
Iron ore hit technical resistance at 460.5 yuan ($67.72), its 50-day moving average, suggesting the remarkable 8-percent rally this week may not have much more momentum as worries about ballooning stockpiles and slackening demand linger.
Last week, stocks of imported iron ore at China's ports rose to 141.5 million tonnes, the highest since 2004, according to data tracked by SteelHome.
The most-traded iron ore contract on the Dalian Commodity Exchange was up 3.16 percent at 457.5 yuan a tonne at 0330 GMT.
Prices are on track for their first quarterly loss since the fourth quarter 2015.
Traders said a breakout this week was inevitable ahead of the quarter and first-half end even without an obvious trigger. Until this week, prices had been stuck between about 415 yuan and 443 yuan this month.
Open interest in the market hit a record on Tuesday, rising 15 percent to 2.68 million lots, equivalent of 268.6 million tonnes worth 122.6 billion yuan.
Iron ore for delivery to China's Qingdao port jumped 5.2 percent to $59.70 a tonne on Tuesday, its strongest since May 25, according to Metal Bulletin.
It was the biggest single-day spike for the spot benchmark since Feb. 13.
"We're not expecting to see a full-blown rally from here, but something in the low $60s looks reasonable over the next few months," said Daniel Hynes, commodity strategist at ANZ.
The most-active construction steel rose 2.96 percent to 3,267 yuan a tonne as investors continued to focus on China's capacity cutbacks and industrial upgrade in the steel sector.
Coking coal jumped 1.55 percent to 1,045.5 yuan a tonne, and coke rose 1.73 percent at 1,676.5 yuan per tonne. ($1 = 6.8003 Chinese yuan renminbi)
(Reporting by Muyu Xu and Josephine Mason in BEIJING and Manolo Serapio Jr in MANILA; Editing by Richard Pullin)