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BEIJING, April 9 (Reuters) – Iron ore futures in China jumped on Thursday on restocking demand as steel inventories dropped again this week, while a recovery in profits at mills further lifted purchases of the steelmaking ingredient.
The most-traded iron ore futures on the Dalian Commodity Exchange, for September delivery, closed up 3.3% at 598 yuan ($84.64) per tonne. It surged 3.8% earlier in the day.
The May futures contract, meanwhile, gained as much as 3.9% to 668 yuan per tonne, the most in two weeks.
The rise in the September contract came as the backwardation in prices narrowed on recovering profits at steel mills, according to Zhuo Guiqiu, an analyst with Jinrui Futures.
The rebar profit margin in north China touched 500 yuan per tonne, as of April 8, compared with a plunge to as low as 34 yuan per tonne last month, according to Jinrui Futures.
“The price for the May contract jumped closer to the spot price as it’s due for delivery soon,” said Zhuo, noting the spot price of iron ore at around 674 yuan per tonne.
Furthermore, another weekly drop in steel inventories held by traders also fuelled demand for steel products and raw materials.
Steel stocks in China fell 4.6% on the week to 22.4 million tonnes as of Thursday, data compiled by Mysteel consultancy showed.