BEIJING: Iron ore futures held near a five-week high on Thursday, boosted by improved demand outlook from the Sino-U.S. trade truce, although weaker credit data from China limited gains.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) closed daytime trade 1.17% higher at 736.5 yuan ($102.13) a metric ton. Earlier in the day, the contract hit the highest point since April 7 at 738.5 yuan.
The benchmark June iron ore on the Singapore Exchange, however, was down 0.37% at $101.45 a ton, as of 0754 GMT.
Hot metal output - a gauge of iron ore demand - may hover at a high level, as exports of manufactured goods could sustain the strong momentum over the 90-day window period, analysts at investment bank CICC said in a research note.
The United States and China agreed on Monday to slash tariffs for 90 days as part of efforts to end a trade war that has disrupted the global economy and set financial markets on edge.
Steelmakers are unlikely to voluntarily reduce output while still able to earn handsome profits, unless a mandated production cut is enforced, according to a trader and two analysts who spoke on condition of anonymity.
Beijing announced in March plans to restructure its massive steel industry through output cuts.
However, the iron ore contract’s gains were limited by rising caution after the release of disappointing credit data.
China’s new bank loans tumbled more than expected in April as a protracted trade war with the United States further eroded the market’s appetite during a typically slow month for loan demand.
Other steelmaking ingredients on the DCE advanced, with coking coal and coke up 0.34% and 0.44%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar added 0.39%, hot-rolled coil edged 0.46% higher while wire rod dipped 0.87% and stainless steel lost 0.23%.
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