MANILA: Iron ore futures rose on Friday, with the Singapore benchmark on track for its biggest weekly gain since June, buoyed by China’s move to bolster economic stimulus efforts even as the country’s steel output shrank in August.
Benchmark October iron ore on the Singapore Exchange (SGX) rose as much as 1.8% to $122.80 per metric ton, its strongest since March 17. For the week, it has risen around 8%, its highest since the week ended June 9.
The steelmaking ingredient’s most-traded January contract on China’s Dalian Commodity Exchange climbed as much as 2.2% to hit a contract-high of 877.50 yuan ($120.90) per ton.
China’s central bank on Thursday said it would cut the amount of cash that banks must hold as reserves for the second time this year to boost liquidity – the latest in a series of stimulus measures, including steps to support a struggling domestic property sector.
The reduction in banks’ reserve requirement ratio demonstrates China’s resolve to boost market confidence, Huatai Futures analysts said in a note.
“We should closely track the market opportunities brought about by macroeconomic policies and the intensity of raw material replenishment in the coming winter,” they said.
Adding to the upbeat mood, data showed China’s industrial output and retail sales grew at a faster-than-expected in August. Analysts, however, said the likely official directive to limit this year’s steel output in top producer China to 2022 levels could curb iron ore prices in coming weeks.
China’s crude steel output in August fell a sharper-than-expected 4.8% from the previous month, as some steel mills scaled back production amid shrinking margins.
Steel benchmarks in Shanghai rose, with rebar up by 1.3%, as of 0330 GMT, hot-rolled coil by 1%, wire rod by 0.4%, and stainless steel by 0.9%. Coking coal and coke on the Dalian exchange climbed 2% and 1.4%, respectively.
Source: Brecorder
