SINGAPORE: Prices of iron ore futures extended gains on Friday and headed for a second consecutive weekly gain, driven by improved market sentiment after officials in top consumer China called to curb aggressive price competition.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended morning trade 1.03% higher at 735.5 yuan ($102.65) a metric ton.
The contract has gained 3.01% so far this week. The benchmark August iron ore on the Singapore Exchange was 0.11% higher at $96.55 a ton, as of 0345 GMT, and was up 2.4% so far this week.
Earlier this week, the Central Financial and Economic Affairs Commission called for stricter measures against aggressive price-cutting competition among companies.
That has raised hopes of a second round of supply reform in the oversupplied steel sector, which could improve steel margins and lift mills’ price tolerance for ingredients, analysts said.
However, signs of softening demand in part due to environmental protection-related production control in Tangshan, China’s top steel-producing hub, limited the upside potential.
Average daily hot metal output, a gauge of iron ore demand, slid by 0.6% week-over-week to the lowest since April 19 at 2.41 million tons as of July 3, data from consultancy Mysteel showed.
The dollar rallied on the back of a surprisingly robust jobs report on Thursday.
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