BEIJING: Iron ore futures extended gains into a fifth straight session on Thursday to erase most losses from the previous month, underpinned by robust near-term demand, improved steel fundamentals, a weaker US dollar and persistent hopes of more stimulus from top consumer China.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade almost 1.8% higher to 864.5 yuan ($118.89) a metric ton. It touched the highest since May 31 at 870 yuan a ton earlier the session. The benchmark August iron ore on the Singapore Exchange was 0.3% higher at $113.75 a ton, as of 0745 GMT, the highest since June 3.
“Relatively high level of hot metal output, despite signs of having touched a ceiling, underpinned ore demand in the near term,” analysts at Jinrui Futures said in a note.
“Also, a seasonal ramp-up in iron ore shipments to meet quarterly targets will likely come to an end,” they added. Supporting prices of the key steelmaking ingredient is also persistent expectation of more stimulus in China later this month.
“A stabilising macroeconomic backdrop in China has provided much-needed support to the market,” ANZ analysts said in a note. “The upcoming Third Plenum meeting over July 15-18 will be crucial as more stimulus is likely to be announced to bolster the sector.” Additionally, improved fundamentals of construction steel, with demand picking up and de-stocking continuing, also boosted overall sentiment, said analysts at Huatai Futures.
Comments