MANILA: Dalian and Singapore iron ore futures rose on Wednesday, rebounding after declines earlier in the session, as reports of COVID-19 curbs being eased in some parts of China, the world’s top steel producer, buoyed sentiment.
Shanghai stainless steel futures also reversed early losses, despite China’s central bank keeping the benchmark one-year loan prime rate unchanged, defying expectations of a reduction.
The most-traded September iron ore on China’s Dalian Commodity Exchange ended the morning trade 0.4% higher at 918 yuan ($143.51) a tonne.
On the Singapore Exchange, the steelmaking ingredient’s most-active May contract rose 1.6% to $153.20 a tonne by 0430 GMT. “There was some initial disappointment in early trading to the unchanged loan prime rate,” said Atilla Widnell, managing director at Navigate Commodities in Singapore. Traders have been hoping for more stimulus support for the world’s second-biggest economy now facing growing downside risks from COVID-19 outbreaks and the Ukraine crisis.
“However, thick and fast news flow on easing epidemic control measures in Jilin and Shandong provinces, and further mortgage and deposit rate cuts in a Beijing district have buoyed markets,” Widnell said. Iron ore, however, saw a tempered rebound amid a clouded demand outlook for the rest of 2022, as China has vowed to produce less crude steel this year than in 2021.
Last year’s output was kept below the 2020 volume, in line with the country’s goal to reduce carbon emissions. Meanwhile, Rio Tinto, the world’s biggest iron ore producer, on Wednesday warned of risks from sustained high inflation, lockdowns in China and a prolonged Russia-Ukraine war. Construction steel rebar on the Shanghai Futures Exchange climbed 1.4%, while hot-rolled coil gained 1.1%. Stainless steel slipped 0.5%. Dalian coking coal shed 2% and coke slumped 1.5%.
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