Dalian iron ore nears one-week high on stimulus hopes

BEIJING: Dalian iron ore futures extended gains on Monday to touch their highest in nearly a week, as investor sentiment was bolstered by expectations of fresh stimulus policies following the release of weak industrial profit data on Saturday.

Profits at China’s industrial firms fell 20.6% in January-April from a year earlier, data from the National Bureau of Statistics (NBS) showed, as companies continued to struggle with margin pressures and soft demand amid a faltering economic recovery.

Expectations of more economic stimulus policies arose partly because NBS said China would focus on recovering and expanding demand in the next stage.

Meanwhile, market talks of May 26 that China will issue 5 trillion yuan of special bonds to support the economy kept sentiment upbeat, though many analysts argued against the possibility of such a move over the weekend.

The most-traded September iron ore on the Dalian Commodity Exchange (DCE) traded 3.21% higher at 707.5 yuan ($102.36) a tonne, as of 0304 GMT, hitting the highest since May 23.

Dalian iron ore dips as China summer lull in steel demand looms

“It’s mainly the expectation of macro-economic stimulus that drove the Dalian (iron ore) futures up today, but we believe the room for this round of rise will be relatively limited due to lingering downstream demand woes,” said Cheng Peng, a Beijing-based raw material analyst at Sinosteel Futures.

The benchmark June iron ore on the Singapore Exchange was 0.43% lower at $100.15 a tonne, as of 0325 GMT.

“Overseas investment sentiment was weak due to a lack of resiliency in the economic recovery there, partly contributing to the divergence in iron ore futures prices trend in both markets,” said Connie Zhang, a ferrous analyst at consultancy Shanghai Metals Market.

Among other steelmaking ingredients, coking coal rose 0.77% and coke gained 0.51%.

Rebar on the Shanghai Futures Exchange climbed 0.99% to 3,481 yuan a tonne, hot-rolled coil moved up 0.93%, wire rod jumped 0.66% and stainless steel ticked up 0.24%.