SINGAPORE: Iron ore futures edged up on Wednesday on a weaker US dollar and resilient demand for the steelmaking ingredient, though weakness in the Chinese property sector limited the rise.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) traded 0.55% higher at 727 yuan ($100.86) a metric ton as of 0248 GMT.
The benchmark June iron ore on the Singapore Exchange was 0.35% higher at $99.75 a ton. The demand for iron ore has exceeded expectations, particularly as steel mills continue to operate at high levels, broker Hexun Futures said.
The number of profitable blast-furnace steel mills is on the rise, with 60% of them reporting profits last week, said consultancy Mysteel.
Further supporting prices was a weaker US dollar, which eased on the day after declining 1.3% over two days against major peers. A weaker US dollar makes greenback-priced commodities cheaper for holders of other currencies.
Meanwhile, China cut benchmark lending rates for the first time since October, while major state banks lowered deposit rates as authorities work to ease monetary policy, boosting sentiment and causing Chinese equities to rise on Tuesday.
But, signs of further weakness in China’s property sector pressured iron ore futures, ANZ analysts said. Broadly, market sentiment was hit by China’s slowing factory output and retail sales numbers missing expectations, while new home prices remained stagnant. On the supply side, the total volume of iron ore dispatched from mining firms in Australia and Brazil jumped 11.7% week-on-week to 27.1 million tons, Mysteel said.
Other steelmaking ingredients on the DCE traded sideways, with coking coal down 0.06% and coke up 0.28%. Steel benchmarks on the Shanghai Futures Exchange gained ground. Rebar gained 0.13%, hot-rolled coil added 0.22%, wire rod rose around 0.3% and stainless steel climbed 0.43%.
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