Dalian iron ore futures rose on Friday after miner Rio Tinto said China's demand for the steelmaking raw material continues to recover, but grim Chinese economic data showing the impact of the coronavirus outbreak kept investors' optimism in check.
The most-traded September iron ore contract on China's Dalian Commodity Exchange ended up 1.3% at 612 yuan ($86.47) a tonne, after rising as much as 2.9% to an eight-month high earlier in the session.
The front-month May contract on the Singapore Exchange also trimmed gains and was up 0.7% in afternoon trade. Rio Tinto Ltd, the world's top iron ore miner, reported stronger-than-expected production in the first quarter but retained its annual output guidance.
The Anglo-Australian miner said demand from Chinese steel mills, particularly for the top-grade material, was strong despite coronavirus-containment measures. Dalian iron ore clung to gains and marked its second straight weekly rise despite data showing China's first-quarter economic output shrank for the first time in decades.
"Markets are starting to look to what the medium- to long-term outlook might be, as the pandemic comes under control," commodity strategists at ANZ wrote in a note. "For commodity markets, the focus will remain on China, the biggest consumer of most commodities. As such, the re-starts of industrial activity should kickstart commodity demand," they said.
The performance of China's economy improved in March after the weakness seen in the first two months of the year, said Mao Shengyong, spokesman at the National Bureau of Statistics.
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