Reuters | April 9, 2024 |
Iron ore futures prices extended gains to a second straight session on Tuesday, underpinned by mounting hopes of improving demand for the key steelmaking ingredient in top consumer China in the coming weeks.
The most-traded September iron ore on China’s Dalian Commodity Exchange (DCE) ended daytime trade up 5.63% at 815.5 yuan ($112.73) per metric ton, its highest level since March 25, following a rise of more than 3% on Monday.
The benchmark May iron ore on the Singapore Exchange was 3.54% higher at $107.95 a ton, as of 0700 GMT, its highest level since March 26, after rising over 6% in the previous session.
Overall macro expectations have somewhat improved after China’sannouncement regarding policies including crude steel control, analysts at Huatai Futures said in a note.
China last Wednesday revealed plans to managecrude steel output this year.
“Steel margins have improved, which may encourage steelmakers to resume production later, thus generating more needs for ore,” Huatai Futures said, while citing high portside ore stocks and higher-than-usual shipments as potential headwinds.
There are also expectations that some steelmakers may ramp up production to generate more cash flow before being required to curb production later this year, analysts said.
The flurry of post-holiday restocking among Chinese steelmakers additionally aided sentiment on Tuesday.
Transaction volumes of iron ore at major ports swelled to 1.63 million tons on Monday from 305,000 tons on Sunday, a working day in China, data from consultancy Mysteel showed.
The obvious cost competitiveness of iron ore against steel scrap increased the appeal of the steelmaking feedstock as margins remained thin despite some improvement.
Other steelmaking ingredients on the DCE also posted gains, with coking coal and coke up 3.36% and 2.5%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were mostly up.
Rebar strengthened 2.19%, hot-rolled coil rose 1.92%, wire rod increased 0.48%, and stainless steel gained 0.77%.
($1 = 7.2338 Chinese yuan)
(By Cassandra Yap and Amy Lv; Editing by Eileen Soreng and Sonia Cheema)
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