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China iron ore futures slip to more than 2-week low as port inventories climb

China’s iron ore futures dipped to their lowest in more than two weeks on Thursday as investors remained cautious amid continued volatility in prices and rising inventory at Chinese ports, while construction steel rebar surrendered earlier gains.

The May 2019 iron ore contract, the most traded on the Dalian Commodity Exchange, was down 1.1 percent at 607 yuan ($90.22) a tonne at the end of a mostly listless session.

“Investors remain on edge in the iron ore market as they await guidance from Vale regarding recent disruptions to its Brazilian mines,” ANZ bank said in a note.

Brazilian iron ore miner Vale on Wednesday announced a series of writedowns and provisions related to the Brumadinho tailings dam collapse that killed some 300 people two months ago.

The company’s quarterly results provided little information about the ultimate cost of its second deadly dam disaster in less than four years.

“Vale didn’t provide any guidance in its quarterly production report. But it indicated that it had shut operations producing almost 93mt/y (93 million tonnes a year) in the wake of January’s dam disaster,” ANZ said.

Notwithstanding supply disruptions, inventory of the steelmaking ingredient at Chinese ports SH-TOT-IRONINV continued to rise, hitting a six-month high of 148.6 million tonnes as of March 22, according to data tracked by SteelHome consultancy.

Other steelmaking raw materials also erased earlier gains, with coking coal ending steady at 1,228.5 yuan a tonne while coke edged up just 0.2 percent to 1,965 yuan, after hitting a session-high 1,976 yuan.

The most active rebar contract on the Shanghai Futures Exchange ended down 0.5 percent at 3,690 yuan a tonne. It rose as much as 0.7 percent to 3,734 yuan earlier in the day, supported by a pick-up in steel demand from the construction sector, but supply also remained plentiful.

Hot rolled coil, used in automobiles and household appliances, trimmed gains to end 0.2 percent higher at 3,675 yuan a tonne.

“With the expected expiry of winter restrictions on production…we could see output begin to ramp up,” said Edward Meir, a consultant at INTL FCStone Financial Inc, referring to output curbs imposed during the cold months starting November aimed at improving air quality.

Despite the production curbs, Chinese steel production in February rose by 9.2 percent from a year earlier, after a 4.3 percent increase in the previous month, figures from the World Steel Association showed.

Source: Reuters

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