Column: China’s export tax bombshell rocks aluminum market
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Iron ore futures rose for a second consecutive session to a one-week high on Tuesday, supported by a weaker dollar and the start of restocking by Chinese steelmakers to maintain production in January.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) ended morning trade 3.05% higher at 776 yuan ($107.17) a metric ton. It hit the highest since Nov. 11 at 779.5 yuan a ton in the afternoon trading session.
The benchmark December iron ore on the Singapore Exchange was 2.02% higher at $101.15 a ton, as of 0717 GMT, after touching the highest since Nov. 11 at $101.9 a ton.
A weaker dollar makes greenback-priced commodities less expensive for buyers holding other currencies.
“Data over the weekend showed that the issuance pace of local government debts has accelerated, indicating more capital available for property projects, boosting the ferrous market,” said Pei Hao, an analyst at international brokerage Freight Investor Services (FIS).
“Moreover, $100 a ton is a key level that traders have been closely monitoring as once prices fall below the level, buying interest for seaborne cargoes picked up even amid high portside stocks.”
Also underpinning prices of the key steelmaking ingredient is some mills kicking off buying seaborne cargoes to meet their production needs over the week-long Chinese New Year holiday break in January, said one Chinese steelmaker and one trader, both requesting anonymity as they are not authorized to speak to media.
“Such buying will lend some support to prices, preventing them from falling sharply, but it’s far from sufficient for any strong price rebound given that portside stocks hovered at a pretty high level,” FIS’s Pei added.
Other steelmaking ingredients on the DCE posted gains, with coking coal and coke up 1.69% and 1.46%, respectively.
Most steel benchmarks on the Shanghai Futures Exchange gained ground. Rebar added 1.84%, hot-rolled coil rose 1.19%, wire rod climbed 0.59% and stainless steel advanced 0.57%.
($1 = 7.2405 Chinese yuan)
(By Amy Lv and Mei Mei Chu; Editing by Janane Venkatraman and Sherry Jacob-Phillips)
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