SHANGHAI: Iron ore futures extended gains into a second straight session on Tuesday to their highest levels in nearly a week, amid growing interest for stockpiling in top consumer China in part spurred by the latest batch of upbeat data.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 5.35% higher at 827 yuan ($114.87) a metric ton, the highest since March 13. The benchmark April iron ore on the Singapore Exchange rose 2.91% to $106.9 a ton, as of 0743 GMT, also the highest since March 13.
“The rise in fixed asset investment should help support steel demand,” analysts at ANZ said in a note. Fixed asset investment expanded 4.2% in the January-February period from the same period a year earlier, official data showed on Monday, versus expectations for a 3.2% rise.
Also, signs of stabilizing futures prices the day before encouraged some mills to re-enter the market to procure portside cargoes, with the increasing liquidity in the spot market, in turn, boosting sentiment, analysts said.
Transaction volumes of iron ore at major Chinese ports climbed by 66% from the previous session to 1.06 million tons, data from consultancy Mysteel showed. “We expect hot metal output to touch the bottom this week,” analysts at Galaxy Futures said in a note.
“Steel demand from the infrastructure sector will likely see an obvious increase in either late March or early April, so we do not think we should be so bearish about the construction steel market,” they added.
Other steelmaking ingredients on the DCE also registered gains, with coking coal and coke up 3.59% and 2.49%, respectively. Steel benchmarks on the Shanghai Futures Exchange were higher. Rebar gained 2.85%, hot-rolled coil climbed 2.99%, wire rod rose 2.14% while stainless steel was little changed.
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