Benchmark Dalian and Singapore iron ore futures advanced for the third consecutive session on Monday, bolstered by renewed optimism around demand for the steelmaking component as signs emerged that top steelmaker China will continue to increase output this month.
Iron ore jumps to seven-week high on Friday
China's iron ore prices jumped to a seven-week high on Friday and were adjusted for their fourth consecutive weekly gain on hopes of a recovery in steel demand from the world's largest producer of construction and fabrication materials.
However, optimism around the core steelmaking component continued to soften as China's rising inventories of imported iron ore reached 156 million tons last week, the highest level since July.
May's top-traded contract of iron ore on China's Dalian Commodity Exchange ended morning trading at 676.50 yuan ($106.21) per tonne, up 1.9 percent after previously touching 696.50 yuan, the strongest since Oct. .
The most active January contract on the Singapore Exchange rose 0.4% to $117.40 per ton.
China's iron ore spot market also posted weekly gains with grades of 62 percent per tonne on Thursday, the highest level since October 27, according to SteelHome advisory data.
Commodity markets in general were normalizing after seeing the wild moves triggered by the power cuts and China changing its regulatory measures, according to ANZ commodity strategists.
Especially for the steel market, they said the stabilized construction activity in China has also helped lift the general mood.
"This supports demand for steel, but the background remains challenging for iron ore through February 2022," they wrote in a note.
While China is expected to provide fog-free skies as it hosts the Winter Games in February, strict steel production controls are expected to continue and limit iron ore demand next year.
China's iron ore port inventories may continue to rise, partly due to weaker purchases from steel mills.
Construction steel rebar SRBcv1 on the Shanghai Futures Exchange rose 0.7%, while hot rolled coil SHHCcv1 rose 0.4%. Stainless steel slipped 0.3%.
Dalian coking coal DJMcv1 rose 3.3% and coke DCJcv1 rose 0.9%.
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