SINGAPORE: Dalian iron ore futures snapped a three-day losing streak on Thursday amid market talks of more China property sector support, although concerns of oversupply and weak demand capped gains.
The most-traded September iron ore on China’s Dalian Commodity Exchange rose 1.3% to 846.0 yuan ($117.92) per metric ton as of 0325 GMT. On the Singapore Exchange, the benchmark August iron ore was up 1.8% at $114.4 per metric ton. “Bulls are now hanging their hats on rumours that regulators are weighing up plans to ease mortgage restrictions to get the economy’s growth engine restarted,” said Atilla Widnell, managing director of Navigate Commodities.
“That said, authorities are forgetting just how damaged and broken consumer confidence is after years of zero-COVID restrictions and delayed property projects,” Widnell added.
On the supply side, seaborne iron ore output increased roughly 3.4% annually in the first 28 weeks of 2023, according to ship-tracking data, adding to oversupply concerns both in China and globally, putting downward pressure on prices, Commonwealth Bank of Australia said. Any stimulus package will likely be limited given concerns over high levels of local government debt, leaving steel demand challenged through H2 2023, the bank added.
On Wednesday, Rio Tinto, flagged concerns about a global economic slowdown as it logged a raft of production issues across its operations, but said its iron ore production should be at the upper end of its expectations for the year. Meanwhile, BHP Group reported its highest-ever annual iron ore production, helped by the continued ramp-up at its South Flank operations in Western Australia, but said it faced rising costs.
Steel benchmarks were up. The most-active rebar contract on the Shanghai Futures Exchange climbed 0.7%, hot-rolled coil strengthened 0.8%, wire rod gained 0.6% and stainless steel jumped 2.4%. Other steelmaking ingredients also spiked, with Dalian coking coal coke rising 3.2% and 2.3% respectively.
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