MANILA: Iron ore futures firmed on Tuesday, with both Dalian and Singapore benchmark contracts gaining more than $3 on expectations that steel usage in China would remain robust in the coming months and offset sluggish demand overseas.
The Dalian Commodity Exchange's most-traded iron ore for delivery in January 2021 closed the session 3.5% higher at 863 yuan ($124.51) a tonne, rising for a fourth session in a row.
Iron ore's front-month September contract on the Singapore Exchange climbed 3% to $120.42 a tonne in afternoon trade, extending gains into a third straight session.
"Market participants are looking forward to a strong second half for Chinese steel demand which should maintain steel and iron ore prices above previous expectations," said Justin Smirk, senior economist at Westpac Economic Research.
Supply disruptions caused by the COVID-19 pandemic will also provide support to the steelmaking ingredient's price, before it softens next year, he wrote in Westpac's monthly market outlook.
Physical iron ore also surged to more than $120 a tonne, with the inclusion of Yandi Fines and Karara Concentrate in the Dalian exchange's list of deliverable brands further boosting prices.
Benchmark 62% iron ore's spot price in top steel producer China jumped to a 13-month high of $121.50 a tonne on Monday, SteelHome consultancy data showed.
Iron ore miner BHP Group expects most major economies except China to bear the brunt of a coronavirus-led downturn this year, as it reported a more than 4% drop in annual profit.
Stainless steel on the Shanghai Futures Exchange extended gains, up 2.2% on strong demand and costlier raw material nickel amid supply constraints.
Shanghai construction steel rebar gained 0.7%, while hot-rolled coil added 1%.-Reuters
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