Iron ore hits 1-month high as China stock rally lifts sentiment

Iron ore prices rose for a second straight session on Thursday, reaching a one-month high as a sharp rally in Chinese equities and improving steel margins boosted investor sentiment.

The most-traded iron ore contract on China’s Dalian Commodity Exchange (DCE) gained 1.55% to 689.5 yuan ($103.33) a metric ton by 0217 GMT.

It earlier touched its strongest level since October 8 at 692 yuan.

The benchmark December iron ore on the Singapore Exchange was 0.87% higher at $92.65 a ton, as of 0207 GMT, after earlier hitting its highest since October 1 at $92.9.

A sharp rebound in Chinese stocks on Wednesday somewhat lifted sentiment across commodity markets, analysts at broker Everbright Futures said in a note.

Steel margins have recently improved, fuelling expectations of higher hot metal output ahead, according to analysts at broker Galaxy Futures.

Higher hot metal output indicates more consumption of feedstocks including iron ore.

“Iron ore prices are currently more influenced by funds and sentiment…demand is likely to show positive signals towards year-end,” said Galaxy Futures analysts.

Coking coal and coke, other steelmaking ingredients, rebounded 2.49% and 1.92%, respectively, as supply recovery remained slow despite repeated government calls to ramp up energy supply.

Many coal mines in northern China’s Shanxi province were closed amid stringent safety inspections following a fatal accident in May.

Steel benchmarks on the Shanghai Futures Exchange were stronger amid higher raw materials prices.

Rebar added 1.03%, hot-rolled coil rose 1.11%, and stainless steel jumped 2.59%.