MANILA: Benchmark iron ore futures were headed for their best month so far in 2023 despite some losses on Friday, amid hopes China would roll out more stimulus to support its sputtering post-COVID economic rebound.
Factory activity in top steel producer China declined for a third consecutive month in June and weakness in other sectors deepened, official surveys showed, piling pressure on Beijing to do more to shore up growth amid faltering demand.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange ended daytime trade 0.7% lower at 822.50 yuan ($113.35) per metric ton, erasing earlier gains though it was still on track for its biggest monthly gain in seven months - up around 17%. On the Singapore Exchange, the focus shifted to the August contract, which also retreated and was down 1.3% at $109.70 per metric ton, as of 0730 GMT.
It has climbed 14% in June, heading for its biggest monthly gain this year, but has fallen about 10% in the second quarter. Spot prices of China-bound iron ore have also climbed this month, buoyed by improved demand, with the benchmark 62%-grade material trading at $116 per metric ton on Thursday, up 15% from May, according to SteelHome consultancy data. “The fundamentals of iron ore are good enough. The output of molten iron has continued to rise recently, (supporting prices) coupled with insufficient supply of scrap steel,” Huatai Futures analysts said in a note.
Traders should also “continue to pay attention to the introduction of more relevant policies to restore the economy and expand consumption”, they said. Other steelmaking ingredients climbed on Friday, with coking coal and coke on the Dalian exchange up 2.2% and 2.0%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were subdued, with rebar virtually flat, while hot-rolled coil edged up 0.3% and wire rod climbed 0.9%. Stainless steel gained 0.5%.
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