BEIJING: Iron ore continued its rally on Friday, on track for a third week of gains, supported by supply concerns and resumed hopes of improved demand from China’s largest steel consumer - the property sector - following a slew of positive signals.
The most-traded January iron ore on China’s Dalian Commodity Exchange (DCE) climbed 1.49% to 951.5 yuan ($130.50) a metric ton, as of 0157 GMT, the highest since August 2021.
The benchmark December iron ore on the Singapore Exchange was 0.78% higher at $126.15 a ton, as of 0203 GMT, the highest since late March.
The price rally was jointly driven by expectations of further interest rate cuts to ensure sufficient liquidity, support for the property sector and worries of supply disruptions, said Pei Hao, an analyst at brokerage FIS.
Factors that also helped boost sentiment included the government’s announcement of support for the property market and news of Chinese authorities asking Ping An Insurance Group to take a controlling stake in embattled firm Country Garden.
“A ‘hard landing’ in the property sector is not expected to be seen in the fourth quarter following some positive signals.
But the momentum won’t last very long as disruptions in the supply side should be temporary,“ Pei added. Meanwhile, major iron ore supplier Vale disclosed a fire in a cargo train in Brazil’s Maranhao state, sparking fears of supply risk, although the miner said no impact is expected on quarterly production.
This came after Australian workers at BHP approved industrial action plans that could include work stoppages.
Some analysts, however, warned mounting downside risks from both possibly tighter government supervision and falling demand in winter.
Other steelmaking ingredients also continued their uptrend, with coking coal and coke on the DCE rallying 2.37% and 2.58%, respectively.
Steel benchmarks on the Shanghai Futures Exchange strengthened as well.
Rebar rose 0.52%, hot-rolled coil climbed 0.86%, wire rod added 0.57% and stainless steel advanced 0.38%.
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