MANILA: Dalian iron ore futures were on track for weekly gains, despite losses in early trade on Friday, as China’s resolve to ramp up policy support for its slowing economy overshadowed worrisome indicators and COVID-19 concerns.
The most-traded iron ore, for September delivery, on China’s Dalian Commodity Exchange was down 1.3% at 858 yuan ($128.56) a tonne, after four consecutive sessions of gains. But the holiday-shortened week saw the contract still gain 0.3%.
“Iron ore managed to push higher, with investors shrugging off weak economic data to focus on support from the government,” particularly for China’s troubled property sector, ANZ commodity strategists said in a note. On the Singapore Exchange, the steelmaking ingredient’s most-active June contract fell 2.9% to $141.05 a tonne by 0340 GMT, putting it on track for a fifth weekly loss.
But in the spot market, the benchmark 62%-grade iron ore bound for China, the world’s top steel producer, remained supported at $144.50 a tonne on Thursday, unchanged from last week but up 18% this year, according to SteelHome consultancy data. The People’s Bank of China on Wednesday pledged to take monetary policy steps to help businesses hit by the coronavirus outbreaks, as Beijing sticks to its “zero-COVID” policy.
That followed last week’s statement by a top decision-making body of the ruling Communist Party pledging stepped-up policy support.
Such recurring pledges of support, which however are still lacking in details, come as latest Chinese data showed the impact of tighter COVID-19 curbs on the economy, including a steep contraction in services sector activity in April. Supply challenges amid an unfavourable weather in Brazil and labour shortages in Australia have also underpinned iron ore prices, analysts have said.
Construction steel rebar and hot-rolled coil on the Shanghai Futures Exchange fell 1.7% each, while stainless steel dropped 2.7%. Dalian coking coal shed 1.2% and coke lost 1.1%.
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