BEIJING: Dalian iron ore futures extended their rise for the fourth consecutive session on Thursday, underpinned by lingering hopes of further stimulus and the need of restocking from steelmakers in top consumer China, although shrinking steel margins capped gains.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) rose 0.49% to 1,018 yuan ($142.21) a metric ton, as of 0208 GMT, the highest since August 2021.
China’s central bank made 350 billion yuan in loans to policy banks through its pledged supplementary lending (PSL) facility in December, fuelling expectations of increased support for the country’s ailing housing sector.
“It’s likely that the PSL will be used for the ‘three major projects’, boosting sentiment,” analysts at Everbright Futures said in a note. The policymakers will step up support for the ‘three major projects’, which would be supportive of steel and iron ore demand, analysts at Citi said in a note.
Three major projects refer to the building of affordable housing, urban village renovation and construction of public infrastructure for dual use.
Helping prices of the key steelmaking ingredient is also fresh concern of supply disruption following the news that multiple iron ore cars at Australia’s Fortescue Ltd had been derailed from the company’s tracks on Saturday at its Western Australia operations. This came despite FMG saying that the incident did not impact its December or first half shipped tonnages.
The benchmark February iron ore on the Singapore Exchange was, however, 0.64% lower at $141.75 a ton, dragged down by the strengthening dollar as investors reassessed their expectations of the scale of rate cuts by the Federal Reserve this year following the release of the latest minutes.
Other steelmaking ingredients on the DCE were mixed, with coking coal dipping 0.74% while coke was flat. Steel benchmarks on the Shanghai Futures Exchange retreated despite higher raw materials costs.
Rebar was little changed, hot-rolled coil eased 0.1%, wire rod nudged down 0.12% and stainless steel lost 0.54%.
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