Iron ore rebounds on hopes of China demand recovery, potential Indian export tax

Credit: REUTERS/MELANIE BURTON

Dalian iron ore, SGX benchmark climb more than 1%

Coking coal, coke rise more than 2%

Steel benchmarks gain on higher raw materials prices

Updates closing prices

SINGAPORE, Feb 27 (Reuters) - Iron ore futures rebounded on Tuesday, supported by hopes of demand recovery in top consumer China and a potential export tax on Indian low-grade iron ore, although lower steel production in the near-term capped gains.

The most-traded May iron ore on China's Dalian Commodity Exchange (DCE) DCIOcv1 ended daytime trade 1.24% higher at 897.5 yuan ($124.70) per metric ton.

The benchmark March iron ore SZZFH4 on the Singapore Exchange was 1.75% higher at $117.45 a ton.

China typically accounts for more than 90% of overall shipments of iron ore from India, which is the world's fourth-largest producer of the steel-making ingredient.

Boosting sentiment is also a rising stock market in the world's second-largest economy.

"The market is looking for a direction from the macroeconomic expectation, and in the face of a weak reality for the moment, it's worth tracking how steel demand recovers," analysts at Everbright said in a note.

Some Chinese steelmakers have postponed plans to resume production amid pressure from poor steel margins or even losses, analysts at consultancy Mysteel said in a note.

China's crude steel production declined 6.9% from the prior year to 77.2 million tons in January, data from the World Steel Association showed.

Other steelmaking ingredients on the DCE posted gains, with coking coal DJMcv1 and coke DCJcv1 both up 2.11%.

Steel benchmarks on the Shanghai Futures Exchange were mostly up.

Rebar SRBcv1 strengthened 1.62%, hot-rolled coil SHHCcv1 rose 1.42%, wire rod SWRcv1 increased 0.82%, and stainless steel SHSScv1 gained 1.11%.

($1 = 7.1971 Chinese yuan)

(Reporting by Cassandra Yap and Amy Lv; Editing by Eileen Soreng and Mrigank Dhaniwala)

((cassandra.yap@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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