BEIJING: Prices of iron ore futures pulled back on Wednesday from nearly three-week highs, as investors turned cautious ahead of data this week that could gauge better whether steel demand in top consumer China has shown signs of recovery.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) recouped early losses to end morning trade 0.2% higher at 756 yuan ($106.02) a metric ton, following an increase of more than 3% in the previous session.
The benchmark September iron ore on the Singapore Exchange was down 0.44% at $101.25 a ton, as of 0334 GMT, after hitting an intraday high at $102.5 a ton earlier in the session. Both benchmarks touched nearly three-week highs on Tuesday when they had risen for two straight sessions.
“The valuation of the ferrous market has recovered a bit thanks to the persistent price rally and futures prices of steel products and iron ore are slightly higher than their counterparts in the spot market,” said Cheng Peng, a Beijing-based analyst at Sinosteel Futures.
“A further uptrend will require more stimulus policies or a clear sign of downstream demand recovery.” It’s mainly the strong expectations of improving demand after mills resume production for the upcoming peak consumption season that had driven this wave of price rebound, analysts at Guotai Junan Futures said in a note. Most steel benchmarks on the Shanghai Futures Exchange continued their uptrend despite at a slower pace.
Rebar and wire rod rose 0.4% each, hot-rolled coil ticked 0.2% higher. Stainless steel edged down 0.1%. Other steelmaking ingredients on the DCE extended gains, with coking coal and coke up 0.91% and 0.63%, respectively.
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