SINGAPORE: Prices of iron ore futures recouped losses on Tuesday, as a wave of new monetary stimulus from China and restocking ahead of the top consumer’s national holidays lifted market sentiment.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) was up 0.52% at 672 yuan ($95.22) a metric ton, as of 0231 GMT. The benchmark October iron ore on the Singapore Exchange traded 2.11% higher at $91.35 a ton.
China’s central bank on Tuesday announced broad monetary stimulus and property market support measures to revive an economy grappling with strong deflationary pressures and in danger of missing this year’s growth target. Governor Pan Gongsheng said the central bank will cut banks’ reserve requirement ratio by 50 basis points and further reduce key interest rates.
“The fundamentals of China’s imported iron ore market brightened over the past week, as rising production at domestic steel mills meant demand for the feedstock stayed firm,” Chinese consultancy Mysteel said in a note.
Domestic steelmakers slowly lifted their hot metal output after profits on steel sales recovered due to revived end-user consumption, and mills’ replenishment demand for iron ore ahead of the upcoming National Day holiday from Oct. 1-7 will further improve fundamentals, Mysteel added.
Attention should be paid to the strength of pre-holiday replenishment, as supply strength has not decreased, leaving short-term inventory pressure relatively large, said Chinese financial information site Hexun Futures. Iron ore prices are expected to fluctuate before the holiday, Hexun Futures said.
Total iron ore stockpiles across ports in China dropped by 1.87% week-on-week to 146.6 million tons, as of Sept. 20, Steelhome data showed.
Other steelmaking ingredients on the DCE, however, were weaker, with coking coal and coke down 0.44% and 0.05%, respectively. Most steel benchmarks on the Shanghai Futures Exchange posted gains. Wire rod climbed about 1.4%, rebar added around 0.6%, hot-rolled coil advanced 1.1%, although stainless steel lost 0.34%.
Source: Brecorder
