By Emily Ou Yong
Iron ore futures struggled for direction on Monday as traders weighed increasing China hot metal output and steelmaking ingredient demand, while closely eyeing signs that steel mills may cut blast furnace operating rates soon due to squeezed margins.
The most-traded September iron ore contract on China's Dalian Commodity Exchange (DCE) COMEX:TIO1! traded 0.47% higher at 744.5 yuan ($109.53) a metric ton, as of 0339 GMT.
The benchmark July iron ore (SZZFN6) on the Singapore Exchange was 0.47% lower at $98.3 a ton.
Blast furnace operating rates in China increased by 0.16 percentage points week-on-week, while the average daily hot metal output increased by 7,100 tons over the same period, data from consultancy Mysteel showed on June 29.
An increase in hot metal output, which is a barometer for iron ore demand, supported Chinese iron ore prices.
Additionally, China's central bank instructed some commercial banks to increase their lending this month, people familiar with the matter said on Friday, the latest sign that demand for credit remains weak as the economy grapples with sluggish domestic consumption.
However, rising raw material costs upstream are prompting steel mills to consider cutting blast furnace operating rates rather than absorb higher input costs, said analysts from Chinese broker Galaxy Futures.
Iron ore inventory at major Chinese ports rose 0.79%, data from consultancy Steelhome showed, further exerting downward pressure on iron ore prices.
Other steelmaking ingredients on the DCE rose, with coking coal NYMEX:ACT1! and coke (DCJcv1) up 2.25% and 1.32%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were little changed. Rebar SGX:RBF1! fell 0.06%, hot-rolled coil COMEX:EHR1! faded 0.03%, wire rod (SWRcv1) declined 0.36% and stainless steel COMEX:HRC1! rose 0.03%.
India's trade remedies body has initiated an anti-dumping investigation into hot rolled steel from China, Japan and Russia, according to a government notification.
($1 = 6.7974 yuan)