BEIJING: Iron ore futures rallied on Thursday to their highest levels in five weeks, underpinned by better-than-expected economic data and the latest batch of stimulus measures in China, the world’s largest consumer of the steelmaking ingredient.
The benchmark iron ore on the Singapore Exchange was 1.37% higher at $116 a metric ton, the highest since July 26.
The most-traded iron ore futures on China’s Dalian Commodity Exchange (DCE) were up 3.11% at 845.5 yuan a metric ton, as of 0215 GMT, their highest since Aug. 1.
“The latest flurry of macroeconomic stimulus largely boosted sentiment … and attention needed to be paid to the low inventories in the industrial chain,” analysts at Huatai Futures said in a note.
“If steel consumption improves further, demand for iron ore from steelmakers will be sustained.”
Iron ore rebounds on prospects of fresh China stimulus for property sector
The official purchasing managers’ index (PMI) in August rose to 49.7 from 49.3 a year before, according to the National Bureau of Statistics, staying below the 50-point level demarcating contraction from expansion. The reading was above a forecast of 49.4.
China will unblock financing channels of stocks, bonds and loans for private enterprises and support their listing and refinancing, its central bank said on Thursday.
Also, two of China’s biggest cities – Guangzhou and Shenzhen in southern China – eased mortgage curbs on Wednesday after Chinese authorities called on cities to broaden the definition of first-home mortgage as part of a string of other measures to revive the troubled property market.
Other steelmaking ingredients also advanced, with coking coal and coke on the DCE up 3.29% and 1.75%, respectively.
Steel benchmarks on the Shanghai Futures Exchange strengthened as well. Rebar climbed 1.22% to 3,738 yuan a ton, hot-rolled coil grew 1.89%, wire rod added 0.23% and stainless steel edged up 0.26%.
Daily crude steel output in China will likely reach 3 million tons in August, consultancy Mysteel said in a report on Wednesday.