Iron ore posted its biggest weekly gain in 13 weeks as traders watched to rein in China's Covid-19 restrictions that stifled steel demand this quarter.
Futures in Singapore rose more than 7% last week on optimism about China's plans to revive the economy after the lockdowns.
Beijing officials said the capital would restart public transportation in most areas, restart restaurant services and allow workers to return to their offices. This comes after the city achieved zero new community cases in most of its 16 districts.
After fluctuating around $130 per ton for most of May, steelmaking material rose to $140 per tonne last week. Investors are watching what demand will be after a dire period for construction and manufacturing activities. There are expectations for more infrastructure spending.
On a positive note, iron ore inventories at major ports fell to their lowest level in the year, hitting an eight-month low, Steelhome data showed. Steelmaking margins are widening again after falling to a 15-month low in May.
Still, investors will expect stronger signs that Chinese cities won't be quarantined again, given the country's Covid Zero policy. In a note, Baocheng Futures wrote that any production cuts on steel would also follow an earlier commitment that production would decline again this year.
Iron ore in Singapore was headed for a one-month high close at 11:48 p.m. local time, up 0.7 percent to $143.75 per ton. Dalian futures were up 1.1% after a break from trading on Friday for a public holiday. Steel rebar and hot rolled coil futures rose in Shanghai.
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