Investors bet on China port stocks remaining toght
* Increased supplies since end May likely to cap gains
* Faltering economy still weighs on steel
SHANGHAI, May 21 Chinese iron ore futures is on
track to post the biggest daily gain in more than three weeks as
investors bet on persistent tightness at port inventories
The most-traded iron ore futures on the Dalian Commodity
Exchange jumped 2.7 percent to 425 yuan($68.53) a
tonne by midday, the highest intraday gain since April 27.
Some investors who bet on a price slump have closed their
short positions after prices hit a two-week low on Wednesday,
leading to a technical rebound for the contract, analysts said.
"The bearish sentiment has faded since yesterday afternoon,
though shipment will be increasing since late May, at least for
now, prices for port stocks remain firm given the limited
availability," said Xia Junyan, an analyst with Everbright
Futures in Shanghai.
The SteelHome China Steel Price Index collects inventory data on a weekly basis from 44 ports in China (FXI). For the week ending May 8, iron ore port inventories moved down significantly. They were at 92.15 million tons. This is the lowest level since January 2014. The inventories for the week before were 96.85 million tons.