BEIJING: Dalian iron ore futures edged higher on Monday, aided by hopes that demand will pick up in top consumer China with participants returning to the market after a week-long Lunar New Year holiday break.
The most-traded May iron ore contract on China’s Dalian was up 0.42% at 960.5 yuan ($133.48) a metric ton, as of 0215 GMT.
“Optimism of stronger demand from China boosted sentiment in the metals sector … construction activity should rise in coming weeks as the seasonal winter lull draws to an end,” analysts at ANZ bank said in a note.
Traders bet on the prospect of further stimulus to be rolled out after China’s Premier Li Qiang on Sunday urged departments under the cabinet to do more work to boost public confidence and expectations, state media reported.
Also, China’s stocks opened higher on Monday as investors returning from the week-long holiday break snapped up tourism and film-maker stocks on the back of buoyant holiday spending data.
The benchmark March iron ore on the Singapore Exchange was, however, trading 1.88% lower at $128.8 a ton as bets of early rate cuts by the Federal Reserve faded amid stronger-than-expected US producer prices in January.
Iron ore at one-week low on weak China data
The weakness in the Singapore benchmark came after it had climbed by over 3% over the holiday break when Chinese bourses were closed.
“Such a steep price fall is out of my expectation, as we thought prices would consolidate today; the sharp drops in the coal market might have given a blow to market confidence, dragging down ore prices as well,” said Cheng Peng at Sinosteel Futures.
Other steelmaking ingredients on the DCE posted losses, with coking coal and coke down 3.91% and 2.58%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar edged down 0.34%, hot-rolled coil nudged 0.1% lower, wire rod was flat, while stainless steel added 1.25%.
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