Iron ore climbs on optimism Iran resolution may revive steel demand

SINGAPORE: Iron ore futures traded higher on Wednesday as renewed interest in negotiations to end the Iran war lifted market sentiment for metals, with a ceasefire expected to restore Middle Eastern demand for Chinese steel.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) traded 0.53percent higher at 760.5 yuan (USD111.51) a metric ton, as of 0246 GMT.

The benchmark May iron ore on the Singapore Exchange was trading up 0.24percent at USD103.75 a ton. Renewed interest in peace talks to end the Middle East conflict has sparked a rally in metals.

The war has disrupted trading flows through the Strait of Hormuz, leading to lower shipments to the Gulf, which consequently resulted in the annually lower steel shipments in March, said Zhuo Guiqiu, an analyst at Jinrui Futures.

The Gulf was China’s second-largest steel export destination last year, accounting for some 16percent of China’s record-high steel exports, as other countries put up trade barriers.

Talks to end the Iran war could resume in Pakistan over the next two days, US President Donald Trump said on Tuesday, after the collapse of weekend negotiations prompted Washington to block shipping traffic to and from Iran’s ports.

In China, iron ore demand currently remains close to peak levels, providing strong support for iron ore prices, a note from Shanghai Metals Market said.

Global crude steel demand is forecast to rise by 0.3percent this year to 1.72 billion metric tons, the World Steel Association said on Tuesday.

Other steelmaking ingredients on the DCE advanced, with coking coal and coke up 1.6percent and 2.56percent, respectively.