MANILA: Dalian and Singapore iron ore futures edged higher on Wednesday, as China’s activity data in January and February pointed to an economic rebound for the world’s top steel producer, even as the road to recovery still looked bumpy.
China’s central bank ramped up liquidity injections when rolling over maturing medium-term policy loans for a fourth month in a row, lending some support to ferrous futures.
The People’s Bank of China’s move followed data last week showing unexpectedly strong credit growth for February, as Beijing looks to support a nascent economic recovery.
The most-traded May iron ore on China’s Dalian Commodity Exchange was up 0.1% at 927.50 yuan ($134.76) a tonne by the midday break, after hitting a high of 935 yuan earlier.
The contract hit a record high of 936 yuan on Tuesday. On the Singapore Exchange, the steelmaking ingredient’s benchmark April contract was up 0.5% at $132.40 a tonne, as of 0338 GMT. China’s retail sales in the first two months of 2023 swung back to growth, but factory activity expanded more slowly than expected, suggesting the bruised economy still needs time to fully emerge from pandemic damage.
China’s crude steel output for the two-month period, however, increased 5.6% as mills ramped up production in anticipation of a further boost in demand, particularly in the second quarter when domestic construction activity usually accelerates, underpinned by dismantling of COVID-19 restrictions.
“The overall consumption of steel products has shown an unexpected growth, which has greatly improved market confidence,” Huatai Futures analysts said in a note.
Rebar on the Shanghai Futures Exchange slipped 0.3%, after scaling a nine-month peak in the previous session, while hot-rolled coil was up 0.1%. Wire rod shed 0.6%, but stainless steel added 0.8%. On the Dalian exchange, coking coal and coke fell 3.9% and 2.7%, respectively, following recent gains.
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