MANILA: Chinese iron ore and steel futures rose on Wednesday, rebounding after two days of losses, with news that China Evergrande Group has resumed work on some property projects bringing relief to a market worried about demand prospects in China.
The debt-laden real estate developer said on Tuesday it has resumed work on 631 pre-sold and undelivered projects as it looks to meet its delivery target for this year.
A persistent property sector weakness in China, alongside a local COVID-19 surge that’s restricting economic activity, has prompted the World Bank to cut its growth outlook for the world’s second-largest economy and top steel producer for 2022 and 2023.
The most-traded May iron ore on China’s Dalian Commodity Exchange ended morning trade 1.6% higher at 813 yuan a tonne. On the Singapore Exchange, benchmark January iron ore was up 1.3% at $110.70 a tonne, as of 0330 GMT.
Steel benchmarks were also firmer, though off session highs, with rebar on the Shanghai Futures Exchange up 1.1%, hot-rolled coil rising 0.8%, and wire rod climbing 1%. Stainless steel dipped 1.6%. Curbing near-term prices, however, Beijing faces a surge in severe COVID-19 cases over the next two weeks, a respiratory expert said, fanning global concerns over possible mutations and knock-on effects for the world economy.
The holiday season and colder weather in China also mean weaker demand for steel, suggesting that any price gains are not sustainable. “The focus has returned to the fundamentals.
As the Spring Festival approaches, there will be routine maintenance and production shutdowns for holidays,” Huatai Futures analysts said in a note.
But that also means “supply increment will be limited”, which could provide some support to prices eventually. Other Dalian steelmaking ingredients also advanced, with coking coal and coke up 1.4% and 1.8%, respectively.