MANILA: Benchmark iron ore futures held their ground on Wednesday, supported by renewed optimism around demand prospects in top steel producer China, while other steelmaking ingredients including coking coal slumped after a two-day advance.
Iron ore’s most-active June contract on the Singapore Exchange was up 1.6% at $103.65 a tonne, as of 0330 GMT, having hit $105.15 earlier in the session.
On China’s Dalian Commodity Exchange, iron ore’s most-traded September contract ended morning trade 0.1% lower at 721 yuan ($104.31)a tonne. It earlier touched 733 yuan, its strongest since April 24.
Support for iron ore remained largely intact, with steel industry consultancy and data provider Mysteel reporting that six mills in North China’s Shanxi province will gradually resume production in the coming two weeks amid improved margins, thanks to lower production costs.
That will likely increase the daily blast furnace capacity utilization rate to 89% from 74.8% as of May 9, Mysteel analysts said. Expectations of expanded stimulus for China’s economy amid an uneven recovery also kept iron ore prices supported.
“Certainly there is a feeling that Chinese authorities are likely to announce further supportive measures over the coming weeks,” said Al Munro of broker Marex.
Dalian coking coal, however, shed as much as 3.4%, while Dalian coke dropped 2.1%. “Considering that the demand is still facing downward pressure, traders are less motivated to haul coking coal,” Sinosteel Futures analysts said in a note.
China’s coal imports fell in April from a 15-month high in the prior month, but its January-April purchases rose a hefty 89% from a year earlier, data on Tuesday showed, overshadowing the suspension of operations at 32 open-pit mines for safety in the northwestern Inner Mongolia region.
Rebar on the Shanghai Futures Exchange dropped 0.9%, hot-rolled coil fell 1.4%, wire rod dipped 2.7%, and stainless steel lost 0.4%.
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