Iron ore prices rebounded on Friday after touching more than two-year lows the day before, aided by a raft of dip buying amid signs of improving steel margins and downstream consumption in top consumer China.
The most-traded iron ore contract on China’s Dalian Commodity Exchange rose 0.22% to 673.5 yuan ($100.65) a metric ton, as of 0157 GMT, losing 1.3% so far this week.
The benchmark November iron ore on the Singapore Exchange was 0.56% higher at $90.35 a ton, as of 0147 GMT.
It has dropped 0.3% so far this week.
Market sentiment was boosted by slightly improved profitability among steel mills, propelling a flurry of dip buying that led to a temporary “technical rebound”, said analysts.
Around 8% of domestic steelmakers were operating at a profit as of October 15, versus 6.9% the week before, data from consultancy Mysteel showed.
The fall in hot metal output, a gauge of iron ore demand, slowed down, indicating that mills will need to restock feedstocks, analysts at broker First Futures said in a note.
But downside risks persisted as portside inventories built up and the demand outlook was vulnerable to remaining low profitability and a slack season ahead.
Coking coal and coke, other steelmaking ingredients, extended losses as supply recovery in major production hubs ramped up, down 1.8% and 0.56%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were rangebound.
Rebar ticked up 0.07%, hot-rolled coil nudged up 0.03%, while stainless steel shed 0.38%.