Iron ore scales 2-week peak as Chinese steel mills rebuild stocks

* Dalian iron ore on track for around 140% gain in 2019

* China’s industrial profits may improve in 2020 - ING

* Increased supply may keep prices under pressure next year

MANILA, Dec 30 (Reuters) - Benchmark Dalian iron ore futures rose on Monday, extending last week’s gains, as some steel mills resumed restocking activities after China’s top steelmaking city of Tangshan lifted anti-pollution restrictions.

However, with the year-end holiday season prompting participants to remain on the sidelines, trading this week is likely to slow down, keeping any gains in check.

The Dalian Commodity Exchange’s most-traded iron ore contract, with May 2020 expiry, gained as much as 1.6% to 651.50 yuan ($93.13) a tonne, the highest since Dec. 16. By 0245 GMT, the contract was up just 0.1%.

On the Singapore Exchange, the front-month January contract rose 0.6% to $90.60 a tonne.

Early gains in steel futures also helped sustain interest in iron ore, buoyed after data last week showed that industrial profits in China grew at the fastest pace in eight months in November.

Ferrous metal miners posted a 170.7% year-on-year increase in profit growth in the 11-month period to November, according to ING analysts.

“Because of the two growth engines in 2020 — infrastructure projects and 5G — industrial profits are expected to enjoy positive growth (next year),” they said in a note.

Prices for spot cargoes of benchmark iron ore with 62% iron content for delivery to China SH-CCN-IRNOR62 settled at $92 a tonne on Friday, from $93 a week ago, data from SteelHome consultancy showed.

The steelmaking raw material’s prices have pulled back after hitting a peak of $126.50 in July this year, based on SteelHome data.

Shipments into top steel producer China picked up in recent months, though iron ore prices are still on track to post an annual gain of around 140%, the commodity’s best performance in three years.

“Expect further pressure on iron ore prices in 2020,” ING analysts said in a separate note. “More supplies from Brazil and higher shipments from Australia mean we’re expecting a softening to $75/tonne by the end of next year.”


* The most-traded construction steel rebar on the Shanghai Futures Exchange edged up 0.1%, but hot-rolled steel coil, used in cars and home appliances, was virtually flat after it surrendered early gains.

* Dalian coking coal advanced 0.7%, while Dalian coke was almost steady.

* Shanghai stainless steel futures were up 0.4%.

$1 = 6.9954 yuan Reporting by Enrico dela Cruz; editing by Uttaresh.V