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Tuesday, January 31, 2023

Iron ore futures rally

MANILA: Iron ore futures climbed on Friday, with the Dalian benchmark vaulting to a more than six-month high and on track for a 43% annual gain, as top steel producer China’s abrupt unwinding of pandemic controls fanned hopes of a recovery in demand in 2023.

Spot prices of the steelmaking ingredient also rallied this week, scaling a five-month peak as traders brushed aside concerns about surging Covid-19 infections across China. But it was set to mark its weakest year-end level in three years.

The most-traded May iron ore on China’s Dalian Commodity Exchange rose as much as 2.2% to 858 yuan ($123.29) a tonne, its strongest since June 10. On the Singapore Exchange, iron ore’s benchmark January contract gained 0.7% to $115.95 a tonne, its loftiest since late July.

Spot 62%-grade iron ore jumped to $116 a tonne on Thursday, the highest since early August, SteelHome consultancy data showed.

After scaling this year’s peak at $163 in March driven by China’s easing of pandemic restrictions and economic stimulus measures, iron ore retreated in recent months and collapsed to $80 levels in November, dragged down by Beijing’s draconian “zero-COVID” policy and a property sector downturn.

“Iron ore is expected to remain strong in the near term (rising to $120/t) and could follow through (rally up to $150/t) in the bull case of a major China credit easing during 1Q’23 and an accelerated China re-opening plan materializing,” Citi analysts said.

Other Dalian steelmaking inputs were also firmer, with coking coal and coke up 0.5% and 1.5%, respectively, as of 0255 GMT. Steel benchmarks were mixed, though, with rebar on the Shanghai Futures Exchange up 1.5% and hot-rolled coil climbing 1.7%, while wire rod fell 1.2%. Stainless steel slipped 0.4%.

Worries about China’s worsening Covid situation may curb near-term iron ore and steel prices, analysts said. “Shanghai rebar markets will have to wait and see if pent-up construction activity and associated steel demand (after the holidays and winter season) can survive the tsunami of Covid caseloads currently sweeping the country,” said Navigate Commodities Managing Director Atilla Widnell.

Iron ore futures rally

Source: Brecorder

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