Chinese iron ore and steel futures edged higher on June 6, tracking gains in commodities from oil to copper, as the dollar fell after a shockingly weak US employment report cut expectations for a near-term hike in US interest rates.
Data released on June 3 showed US nonfarm payrolls only increased by 38,000 last month, the smallest gain since September 2010 and confounding forecasts for a rise of 164,000 jobs.
Many investors have since ruled out the possibility of the Federal Reserve raising US rates this month, sending the dollar to its lowest in more than three weeks versus a basket of major currencies and boosting commodities.
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All eyes will be on Fed Chair Janet Yellen who speaks at an event at 1630 GMT on June 6. While she may temper the bearishness from last week’s nonfarm payrolls, Mizuho Bank analysts do not see hawkish bets being revived either.
The most-traded rebar on the Shanghai Futures Exchange was up 1.3 per cent at 2,005 yuan ($305) a tonne by 0224 GMT. Iron ore on the Dalian Commodity Exchange rose 1.4 per cent to 352.50 yuan a tonne.
The rises in both ferrous futures follow flat to marginal gains last week as investors weighed the onset of a seasonal slowdown in construction activity this month.
Some Chinese steel mills may be looking to build some stocks of raw material iron ore ahead of the Dragon Boat festival holidays in China on June 9 and 10, Commonwealth Bank of Australia analyst Vivek Dhar said in a note.
Still, high stocks of iron ore at China’s ports suggest appetite among mills for fresh seaborne cargoes may be limited, traders said
Inventory of imported iron ore at China’s major ports stood at 100.25 million tonnes on June 3, down 400,000 tonnes from the prior week when it reached the most since December 2014, according to data tracked by industry consultancy SteelHome.
On June 3, iron ore for immediate delivery to China’s Tianjin port; climbed 3.3 per cent to $49.50 a tonne after falling to a 15-week low the day before, data compiled by the The Steel Index showed. But it was down 2.8 per cent for the week, its fifth weekly loss out of six. ($1 = 6.5633 Chinese yuan)