Iron ore logs third weekly loss amid high stocks, BHP-China talks in focus

Reuters04-10 15:35
UPDATE 1-Iron ore logs third weekly loss amid high stocks, BHP-China talks in focus

Updates prices as of market close

BEIJING, April 10 (Reuters) - Iron ore prices were rangebound on Friday amid improved inflation data in top consumer China, but elevated portside stocks and expectations of rising supply kept prices on track for a third weekly fall.

Additionally, hopes of potential progress in supply contract negotiation between China's state iron ore buyer and global miner BHP <BHP.AX> put prices under pressure as any positive signs may dictate more availability of spot cargoes ahead.

On Thursday, BHP's incoming CEO, Brandon Craig, met with the chairman of Chinalco in Beijing.

The most-traded iron ore contract on China's Dalian Commodity Exchange (DCE) DCIOcv1 reversed course to end daytime trade down 0.33% at 753.5 yuan ($110.28) a metric ton, and posted a weekly drop of 5.9%, the biggest in a year.The benchmark May iron ore SZZFK6 on the Singapore Exchange was 0.62% higher at $103.7 a ton by 0654 GMT. It was on track for a 1.7% weekly decline, the biggest in two months.

China's factory-gate prices rose for the first time in 3-1/2 years in March, official data showed, in an early sign that the Middle East conflict is feeding cost pressures into the world’s second-largest economy.

While the improved data boosted market sentiment, economists warned that a move to inflation driven by higher costs rather than stronger demand could complicate policy decisions.

Meanwhile, near-record high portside stocks, slowing demand increase and expectations of more abundant spot availability were headwinds for iron ore prices, limiting upside, said analysts and traders.

The average daily hot metal output, a gauge of iron ore demand, rose for a fourth straight week by 0.8% week-on-week to 2.39 million tons by April 9, versus a weekly increase of 2.7% seen the week before, data from consultancy Mysteel showed.Coking coal DJMcv1 and coke DCJcv1, other steelmaking ingredients, tumbled 4.22% and 2.21%, respectively.Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar SRBcv1 shed 0.23%, wire rod SWRcv1 lost 0.7%, hot-rolled coil SHHCcv1 eased 0.12% while stainless steel SHSScv1 gained 1.01%.

($1 = 6.8327 Chinese yuan)

(Reporting by Amy Lv and Lewis Jackson; Editing by Ronojoy Mazumdar and Eileen Soreng)

((amy.lv@thomsonreuters.com))

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