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Iron ore gains on declining shipments but mixed China data cap gain

Iron ore futures rose for the second session in a row on Wednesday. This was largely due to falling shipments, and a resilient demand. However, mixed factory data from China, the top consumer, curtailed gains.

The daytime trading price of the most traded September iron ore contract at China's Dalian Commodity Exchange was 0.68% higher, closing at 736.5 Yuan ($102.59).

As of 0700 GMT, the benchmark August iron ore traded on Singapore Exchange was up by 0.24% to $96 per ton.

Everbright Futures analysts said that iron ore shipments by top suppliers Australia, Brazil and South Africa have declined after a ramp-up at the end of last quarter.

Galaxy Futures analysts said that the demand side would support prices.

Analysts at Galaxy said that despite a small decline, hot metal production was still relatively high and steel consumption in the manufacturing sector is strong.

Iron ore demand is usually gauged by the hot metal production.

Iron ore futures gains were limited due to data showing that China's consumer price rose for the first five-month period in June while its producer deflation reached its highest level in nearly two years.

In the face of a global trade war that is causing uncertainty and a subdued domestic demand, policymakers are under pressure to take more measures.

Coking coal and coke, which are used to make steel, have both gained in the DCE. They rose by 3.81% each and by 2.43% respectively.

The recent crackdown on the price war has raised expectations for supply-side reforms to be implemented in the coal industry, said a coal analyst based in Shanghai under condition of anonymity because he was not authorized to speak to media.

The benchmarks for steel on the Shanghai Futures Exchange have been moving in a narrow range. Rebar, hot-rolled coil, and stainless steel were all little changed. Wire rod, however, dropped by 0.42%. $1 = 7.1790 Chinese Yuan (Reporting and editing by Harikrishnan Nair, Subhranshu Sahu and Lewis Jackson)

(source: Reuters)