MARKET OUTLOOK - Iron Ore Rises on Hopes of Stock Replenishment Before Holidays

Futures iron ore prices rose, supported by expectations of another wave of restocking among steel producers in China, but high inventories and concerns about demand for next year limited the gains.

On the Dalian Commodity Exchange (DCE), May iron ore finished the morning session up 0.97% at 781 yuan/ton ($107.01). The contract hit a low of 762.5 yuan/ton during the early hours, marking the lowest level since November 19.

The benchmark January iron ore on the Singapore Exchange reached a low of $99.8, the lowest since November 19, before rising 0.96% to $101.6/ton at 06:26 GMT.

Analysts noted that expectations of purchasing by Chinese steel producers ahead of the upcoming holiday provided some support for the key raw material used in steel production.

According to data from Mysteel consultancy, daily average hot metal output fell for the fifth consecutive week. In the week leading up to December 20, production decreased by 1.3% week-on-week to 2.29 million tons, the lowest level since early October.

Chinese steel producers typically accumulate stocks to meet production needs during the holiday period as well as after the Chinese New Year, which begins on January 28.

Coking coal and coke prices on the DCE rose by 0.13% and 1.45%, respectively.

Steel indicators on the Shanghai Futures Exchange increased, with rebar up 0.52%, hot-rolled coil up 0.44%, wire rod up 0.25%, and stainless steel up 1.17%.