Dalian iron ore set for first monthly gain in four on firm near-term demand

SINGAPORE: Dalian iron ore futures edged higher on Monday and were set to log their first monthly rise in four months amid firm near-term demand in top consumer China, although a protracted property crisis kept gains in check.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended morning trade 0.21% higher at 715.5 yuan ($99.87) a metric ton.

The contract has gained 1.71% so far in June. The benchmark July iron ore on the Singapore Exchange was 0.16% lower at $94.4 a ton, as of 0346 GMT, falling 1.3% so far this month. Hot metal output, a gauge of iron ore demand, remained firm at around 2.42 million tons as of June 27, according to data from consultancy Mysteel.

Meanwhile, the average blast furnace capacity utilisation rate rose 0.04 percentage points to reach 90.83% in the June 20-26 period, Mysteel said in a separate note. Still, manufacturing activity in China shrank for a third straight month in June, according to a survey.

Analysts said weak domestic demand on top of a prolonged property crisis causes factory owners to sit on inventory and wait to see if Beijing can strike deals to ease tensions with the US and the European Union.

The US dollar was weaker, as investors anticipated rate cuts after Federal Reserve Chair Jerome Powell said last week that rate cuts were likely if inflation did not spike from tariffs.

A weaker greenback makes dollar-denominated assets cheaper for holders of other currencies. Other steelmaking ingredients on the DCE climbed, with coking coal and coke up 1.14% and 0.82%, respectively. Steel benchmarks on the Shanghai Futures Exchange mostly increased. Rebar strengthened 0.43%, hot-rolled coil inched 0.22% higher, stainless steel gained 0.48% and wire rod dipped 0.21%.