By Emily Ou Yong
Iron ore futures rose on Thursday, after China moved to restrict deliveries of certain Fortescue ASX:FMG products to some local steel mills, tightening supply in the world's largest market for the steelmaking ingredient.
The most-traded September iron ore contract on China's Dalian Commodity Exchange (DCE) COMEX:TIO1! was 0.48% higher at 740 yuan ($109.01) a metric ton.
The benchmark August iron ore (SZZFQ6) on the Singapore Exchange was up 0.89% at $98.40 a ton.
State-run iron ore buyer China Mineral Resources Group has notified some mills verbally that from July 15 they must not take delivery of portside cargoes of Fortescue's Super Special Fines and Fortune Fines, both of which are lower-grade iron ore products, five sources with knowledge of the matter said.
Stocks of Fortescue's Super Special Fines at some major Chinese ports stood at 7.22 million tons, as of June 30, said a separate trader on condition of anonymity.
That represents nearly 5% of total portside iron ore stocks, according to a Reuters calculation based on data from consultancy Steelhome (SH-TOT-IRONINV).
Lower shipping costs, however, capped gains in iron ore prices on Thursday.
Oil prices dropped about 1%, down for a third consecutive day, after Qatar said Iran and the U.S. had made progress in indirect talks focused on the Strait of Hormuz, which handled one-fifth of global oil supply before the war.
Other steelmaking ingredients on the DCE were mixed, with coking coal NYMEX:ACT1! up 0.2% and coke (DCJcv1) down 0.96%.
Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar SGX:RBF1! fell 0.2%, hot-rolled coil COMEX:EHR1! declined 0.33%, and stainless steel COMEX:HRC1! shed 0.72%. Wire rod (SWRcv1) rose 0.24%.
($1 = 6.7885 Chinese yuan)