BEIJING: Iron ore futures rose to a near three-week high on Tuesday, boosted by growing buying appetite from steelmakers in top consumer China ahead of the upcoming peak demand season.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 3.34% higher at 758 yuan ($106.38) a metric ton, the highest since Aug. 7.
The benchmark September iron ore on the Singapore Exchange was up 1.5% at $101.75 a ton as of 0714 GMT, the highest since Aug. 9. “The main trigger for this round of price rebound is the reinforced signal of an interest rate cut from (the US Federal Reserve’s) Powell,” said Pei Hao, a Shanghai-based analyst at international brokerage Freight Investor Services.
“Moreover, some steelmakers started to stockpile iron ore to meet production needs for September when steel demand will likely improve, providing some support to ore prices.”
A few mills have planned to resume production following a maintenance period, sparking expectation that ore demand will bottom out, according to analysts at Everbright Futures.
However, thin steel margins and lingering high portside stocks remained headwinds, limiting the upside, said analysts. Steelmakers turned to losses from profits from January to July, versus a year before, even as China’s industrial profits grew at a faster pace. Other steelmaking ingredients on the DCE jumped, with coking coal and coke up 4.57% and 3.86%, respectively, to their two-week highs. Steel benchmarks on the Shanghai Futures Exchange were stronger. Rebar added 1.12%, hot-rolled coil climbed 1.9%, wire rod rose 1.37% and stainless steel climbed 1.05%.
“Both output and stocks of construction steel products have been falling; the suspension of steel capacity swap bolstered short-term sentiment,” analysts at Huatai Futures said in a note. China temporarily halted its steel capacity replacement programme from Aug. 23 while working to revise the measures.
“But it’s difficult to reverse the situation where domestic demand remains insufficient,” Huatai analysts said.
Source: Brecorder
