BEIJING: Dalian iron ore futures climbed to a four-week high on Tuesday, supported by bets of more stimulus in top consumer China, while prices in Singapore retreated after touching the $110 a metric ton psychological level.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) was up 1.2% at 841 yuan ($115.66) a ton, as of 0241 GMT. Earlier in the day, it hit the highest since June 7 at 846.5 yuan a ton.
The benchmark August iron ore on the Singapore Exchange was down 0.3% at $109.45 a ton, after earlier touching a high of $110.2 a ton. The ferrous market has benefited from some improved sales in the property market thanks to a slew of stimulus measures, analysts at Huatai Futures said in a note.
Steelmakers lack sufficient motivation to scale back output in the short term and the relatively high hot metal output means that mills need to restock raw materials, analysts at Chaos Ternary Futures said in a note.
Prices of the key steelmaking ingredient were also supported by lingering expectations of more stimulus from the upcoming third plenum, said analysts.
The third plenum will be held from July 15 to 18, focusing on deepening reforms and promoting the modernisation of China. Analysts at CITIC Futures, however, cautioned that the upward momentum might not sustain for long, given that downstream steel demand has yet seen much improvement and the number of mills implementing equipment maintenance has increased.
Other steelmaking ingredients on the DCE advanced further, with coking coal and coke up 1.9% and 1.7%, respectively. Steel benchmarks on the Shanghai Futures Exchange posted marginal gains. Rebar added 0.5%, hot-rolled coil ticked 0.4% higher, wire rod gained 0.4% and stainless steel rose nearly 0.5%.
“The steel market will likely maintain the upward momentum until the third plenum,” analysts at Galaxy Futures said in a note.
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