UPDATE 1-Chinese iron ore futures close higher as mills boost output

UPDATE 1-Chinese iron ore futures close higher as mills boost output

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Benchmark iron ore up as much as 1.8%

* Spot 62% iron ore rises to $84.5 per tonne (Adds details; Updates with closing prices)

BEIJING, May 6 (Reuters) – Dalian iron ore futures ended higher on Wednesday, supported by ramping up of production by steelmakers amid robust construction activity and hopes for further demand as China eased coronavirus restrictions.

Beijing had relaxed quarantine rules ahead of the holidays from May 1 and May 5 to allow travel flows for people from low-risk parts of the country, suggesting more economic activities will be resumed after months-long curbs.

Weekly capacity utilisation rates at blast furnaces in 247 mills across China rose to 81.68% as of April 30, data from Mysteel consultancy showed.

The most-traded iron ore futures on the Dalian Commodity Exchange for September delivery, ended up 0.6% to 611 yuan ($86.22) per tonne after jumping as much as 1.8% to 618 yuan earlier.

Prices of spot iron ore with 62% iron content for delivery to China rose to $84.5 per tonne in the last trading session on April 30.

Fitch Solutions said it expects iron ore prices to remain resilient compared with other metals.

“We expect stronger Chinese steel production in H220 to boost demand and prices of iron ore further from current levels,” Fitch said in a note.

China’s steel mills are rapidly cranking up output on rising profit margins and hopes that government stimulus will revive consumption, despite an overhang of inventories and a slowdown in global steel demand due to the coronavirus pandemic.

Other steelmaking ingredients also gained, with Dalian coking coal rising 1.8% to 1,081 yuan a tonne and Dalian coke up 1.6% at 1,708 yuan per tonne.

FUNDAMENTALS

* Construction rebar on the Shanghai Futures Exchange , for October delivery, rose 1.5% to 3,392 yuan a tonne.

* Hot-rolled coil, used in the manufacturing sector, jumped 1.5% to 3,248 yuan a tonne.

* The June contract of Shanghai stainless steel increased jumped 2.5% to 13,235 yuan per tonne.

* China’s exports and imports are expected to record double-digit declines in April after a tentative recovery in March as the coronavirus pandemic batters global demand and disrupts manufacturing supply chains, a Reuters poll showed on Wednesday.

* China’s most populous cities saw a spike in outbound travellers on May 1, the first day of a long holiday weekend, led by Wuhan, the epicentre of the COVID-19 pandemic. However, travel levels were still well below those at the same time last year.

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