China's iron ore prices jumped to a seven-week high on Friday and were set for a fourth straight weekly gain, on growing hopes of a recovery in steel demand in the world's biggest producer of the construction and manufacturing material.
The optimism around the key steelmaking ingredient, however, continued to be tempered by China's rising stockpiles of imported iron ore hitting 156 million tonnes last week, the highest level since July 2018.
Iron ore's most-traded May contract on China's Dalian Commodity Exchange ended the morning trade 1.9% higher at 676.50 yuan ($106.21) a tonne, after earlier touching 696.50 yuan, its strongest since Oct. 28.
On the Singapore Exchange, the most-active January contract rose 0.4% to $117.40 a tonne.
China's spot market for iron ore also saw sustained weekly gains, with the benchmark 62% grade at $117.50 a tonne on Thursday, the highest since Oct. 27, based on SteelHome consultancy data.
In general, commodity markets were normalising after seeing wild moves triggered by power shortages and shifting Chinese regulatory measures, according to ANZ commodity strategists.
For the steel market, in particular, the stabilising construction activity in China also helped lift the overall mood, they said.
"This supports steel demand, though the backdrop remains challenging for iron ore until February 2022," they wrote in a note.
With China expected to ensure smog-free skies while hosting the Winter Games in February, tight steel production controls are likely to remain in place next year, putting a cap on iron ore demand.
China's iron ore port stockpiles, partly due to weaker offtakes from steel producers, may thus continue piling up.
Construction steel rebar on the Shanghai Futures Exchange rose 0.7%, while hot-rolled coil gained 0.4%. Stainless steel slipped 0.3%.
Dalian coking coal jumped 3.3% and coke advanced 0.9%.
Comments
Comments are closed.