Iron ore futures rose more than 9 percent in the Singapore market, amid stock growth expectations and a recovery in demand after the summer recession.
Profits from manufacturing facilities in China have returned to their highest levels since May, according to an indicator by Bloomberg Intelligence.
In a note, Australia & New Zealand Banking Group Ltd. said, “The market expectation is the sudden increase in profit margins of steelmakers and the consequent increase in demand from production facilities.
It was supported by the expectations that it will increase.
Production facilities are also increasing their pre-holiday stocks in China. Besides, uncertainty is still rising after Chinese officials asked local governments to prepare for the possible collapse of Evergrande.”
After falling to $90 a tonne last week, prices are poised to rise for five consecutive days, the longest streak since June.
Iron ore, which is used in steel production, has been following a very active course in recent months, with China increasing its efforts to keep production below last year's record level to combat carbon emissions.
Call for factories to cut production in China
The liquidity crisis of the Chinese real estate development company China Evergrande Group and the spillover effects of the restrictions in the real estate sector in China raise concerns.
However, iron ore is still down more than $100 from its May peak as the electricity shortage in China weighed on industrial activity and put additional pressure on demand.
Steelmaking facilities in the Jiangsu region have been instructed to cut production in order to reduce electricity use, as Mysteel stated based on a survey of operators. Some plants in the Hunan region are also planning to reduce production.
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