MANILA: Chinese iron ore futures extended gains to a fifth straight session on Thursday as mills bought the steelmaking ingredient to replenish inventories on hopes of strong demand in the coming months, sending spot prices to an 11-month high.
The Dalian Commodity Exchange's most-traded September iron ore contract closed 1% higher at 789 yuan ($112.93) a tonne. Iron ore for August delivery on the Singapore Exchange reversed early losses to inch up 0.1% to $102.80 a tonne in afternoon trade.
The spot price of benchmark ore with 62% iron content hit $106 a tonne on Wednesday, the highest since August 2019, data from SteelHome consultancy showed. Encouraged by the bullish sentiment towards iron ore and strengthening finished steel prices, iron ore traders kept their price offers firm on Wednesday, according to Mysteel consultancy.
"Strong demand amid optimism over Chinese economic growth recovery continued to feed through the market," commodity strategists at ANZ wrote in a note. "Rebounding property sales and stronger heavy machinery sales are reconfirming the underlying demand."
Citi Research now expects China's steel demand this year to grow 3.8%, revising its forecast from a 4% contraction. Construction steel rebar on the Shanghai Futures Exchange climbed 1.3%, advancing for a sixth day.
Hot-rolled steel coil, used in cars and home appliances, also rose 1.3%, while stainless steel edged up 0.3%. China's factory gate prices fell for a fifth straight month in June as the coronavirus pandemic weighed heavily on industrial demand, although signs of a pickup in some parts of the sector suggest a slow economic recovery remains intact.
China shares extended a winning streak into an eighth session on Thursday, helped by policy support, abundant liquidity and retail investor enthusiasm.