Chinese iron ore futures extend rally

Mainland iron ore futures rose for a third consecutive day to hit their upward daily limit yesterday and posted a second weekly gain as mills in the world's top buyer stepped up buying.

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Iron ore inventories at main mainland ports dropped 600,000 tonnes on a week earlier to 93.61 million tonnes. Photo: AFP

Published: 8:00pm, 24 Apr 2015

Mainland iron ore futures rose for a third consecutive day to hit their upward daily limit yesterday and posted 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 closed up 4 per cent at 417.50 yuan (HK$522). For the week, the price was up 4.4 per cent.

"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.

Iron ore inventories at main mainland ports dropped 600,000 tonnes on a week earlier to 93.61 million tonnes, data from industry consultancy Umetal.com showed.

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 per cent yesterday. And the rally helped lift the benchmark contract, analysts said.