BEIJING: Iron ore futures prices drifted higher on Wednesday, as bets that easing US-China trade tensions and Beijing unveiling more stimulus measures to support economic growth outweighed concerns over rising ore supply and diminishing steel demand.
Hopes grew for a de-escalation of trade spat between the world’s two largest economies after US President Donald Trump said on Monday he expected to reach a fair trade deal with Chinese President Xi Jinping.
Trump also said he would visit China early next year at Beijing’s invitation. The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) closed daytime trade 0.65 percent higher at 774 yuan (USD108.66) per metric ton. The benchmark November iron ore on the Singapore Exchange was 0.47 percent higher at USD104.05 a ton, by 0653 GMT. “The rise is driven by the macroeconomic factor as an expected ease in US-China trade tension sparked risk-on sentiment,” said Zhuo Guiqiu, an analyst at brokerage Jinrui Futures.
Also, investors bet for more China stimulus following a raft of downbeat data as the Communist Party leadership’s four-day closed-door meeting that began on Monday is expected to culminate with an outline of its next five-year policy. However, anticipation of growing supply for the rest of the year, which coincides with seasonally slow steel demand, curbed price gains. Brazilian miner Vale, one of the world’s largest iron ore miners, produced 94.4 million metric tons of the steelmaking material in the third quarter, a 3.8 percent year-on-year increase and the highest since the last three months of 2018. Elsewhere, Rio Tinto has stockpiled 2 million tons of high-grade iron ore at its Simandou project in Guinea for a mid-November shipment. Coking coal and coke, other steelmaking ingredients, climbed 1.43 percent and 1.06percent, respectively.
Steel benchmarks on the Shanghai Futures Exchange gained ground. Rebar advanced 0.59percent, hot-rolled coil rose 0.81 percent, wire rod added 0.09 percent and stainless steel gained 0.36 percent.