BEIJING: Iron ore futures rose on Thursday, buoyed by renewed hopes of improving demand in top consumer China in the coming weeks, but concerns over high inventories and the extent of recovery in downstream steel demand capped gains.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 0.53% higher at 760 yuan ($106.93) a metric ton.
The benchmark September iron ore on the Singapore Exchange surrendered some earlier gains, but was still up 0.84% to $101.65 a ton, as of 0850 GMT.
“We expect hot metal output to rebound next week although a continued fall will be seen this week,” said Xie Qingwei, an analyst at consultancy Shanghai Metals Market (SMM).
Output of hot metal, a blast furnace product, is typically used to gauge iron ore demand. Analysts at BMI revised their 2024 iron ore price forecast to an annual average of $110 a ton from $120 a ton, as subdued demand in China continues to pressure the iron ore market. “We expect negative sentiment over the sluggish Chinese property sector, the downfall of which now looks irreversible, to persist, further capping prices.”
Other steelmaking ingredients on the DCE were mixed, with coking coal up 0.29% and coke down 0.1%. Steel benchmarks on the Shanghai Futures Exchange were subdued. Rebar was little changed, hot-rolled coil fell 0.6%, wire rod shed 2.05% and stainless steel was flat.
“Several steelmakers started equipment maintenance or production cuts amid loss sweeping through the whole industry, contributing to somewhat falling stocks and a rebound in steel prices,” Jiang Wei, secretary general of the state-backed China Iron and Steel Association said on Wednesday.
“But the rebound is still quite fragile... steel mills should continue to exercise ‘self discipline’ to control production so as to lower stocks, adjust supply and demand fundamentals, stabilize the market and avoid the ‘involution’ style vicious competition,” Jiang added.
Comments
Comments are closed for this article.