By Enrico Dela Cruz
March 28 (Reuters) – Iron ore futures extended their rebound on Tuesday as easing worries about the banking sector lifted steel price benchmarks in Shanghai, though lingering concern about demand prospects in top steel producer China limited gains.
The declining Chinese portside inventory of iron ore also provided support to the steelmaking ingredient, which hit oversold levels last week amid concerns particularly about a drop in construction steel demand.
The most-traded May iron ore on China’s Dalian Commodity Exchange DCIOcv1ended daytime trade 1.8% higher at 882 yuan ($128.11) a tonne. It climbed 1.3% in the previous session, snapping a seven-session slump.
On the Singapore Exchange, benchmark April iron ore SZZFJ3 was up 1.8% at $122.65 a tonne, as of 0741 GMT.
Regional U.S. lender First Citizens BancShares scooped up assets of failed U.S. lender Silicon Valley Bank on Monday, triggering a relief rally in financial markets fearing a deeper banking sector turmoil. MKTS/GLOB
Analysts, however, said worries about a global credit crunch that could curb economic growth and metals demand, along with steel mills’ low-inventory strategy, production restrictions and regulatory risks in China, will likely keep iron ore gains in check.
A weak property market in China, a major demand driver for steel, is also expected to keep sentiment subdued, they said.
In the meantime, any decline in iron ore prices may also be limited, especially with the port stockpile in China at its lowest level since early February, based on SteelHome consultancy data. SH-TOT-IRONINV
“The market remains sensitive to near term moves in port inventory,” National Australia Bank analysts said in a note.
Rebar on the Shanghai Futures Exchange SRBcv1 rose 0.8%, hot-rolled coil SHHCcv1 edged up 0.5%, wire rod SWRcv1 climbed 1.8%, and stainless steel SHSScv1 added 0.2%.
Other steelmaking inputs on the Dalian exchange dipped, however, with coking coal DJMcv1 and coke DCJcv1 down 1.3% and 2%, respectively.
(Reporting by Enrico Dela Cruz in Manila; editing by Nivedita Bhattacharjee)
((enrico.delacruz@thomsonreuters.com))
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