SINGAPORE: Iron ore futures rose on Wednesday as a new guidance by China’s central bank to expand loan issuance eased consumption concerns, although declining crude steel use and rising ore supply weighed on prices.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) closed day trade 0.9percent higher at 787.5 yuan (USD115.24) a metric ton. The benchmark June iron ore on the Singapore Exchange was 0.54percent higher at USD106.35 a ton, as of 0702 GMT.
The People’s Bank of China has asked banks to expand loan issuance and ensure the outstanding loan balances post positive month-on-month growth in April to underpin the economy, sources told Reuters.
In addition, restocking ahead of China’s five-day May Day holiday and steady demand for construction steel also supported ore prices, consultancy Mysteel said in a note.
However, China’s apparent crude steel consumption in the first quarter slipped by 4.4percent year-on-year to 220 million tons, the state-backed China Iron and Steel Association (CISA) told reporters, highlighting tepid demand for the material.
China’s state iron ore buyer has lifted its ban on purchases of certain BHP ore products that had piled up at ports, four sources with knowledge of the matter said on Tuesday.
Steelmakers can now buy and take delivery from ports previously frozen BHP products such as Jimblebar fines - a type of medium iron ore - after submitting a report to China Mineral Resources Group, said the sources, speaking on condition of anonymity, with rising supply weighing prices down.
Other steelmaking ingredients on the DCE gained, with coking coal and coke both up 0.71percent. Most steel benchmarks on the Shanghai Futures Exchange advanced.
Rebar climbed 0.57percent, hot-rolled coil traded 0.8percent higher and stainless steel firmed 0.71percent, while wire rod slumped 3.56percent.
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