China iron ore futures extend gains on demand hopes

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Chinese iron ore futures rose for the fourth straight session on Wednesday, as investor sentiment shored up after the state council rolled out package to rescue the economy, though the jump could be restrained by steel output controls.

China’s cabinet on Tuesday announced 33 measures including fiscal, financial and investment policies to revive its virus-hit economy and pledged to inspect implementation by local governments.

“In the short- to medium-term, recovery in ferrous products demand is promising,” analysts with SinoSteel Futures wrote in a note.

However, with rising seaborne arrivals of the raw material and limited molten iron output, there is no much room for further jump in iron ore prices, according to the note.

Benchmark iron ore futures on the Dalian Commodity Exchange for September delivery leaped 1.1% to 906 yuan ($135.52) a tonne at close, tracking spot 62% iron ore which increased $2 to $138.5 a tonne on Tuesday, according to SteelHome consultancy.

Dalian coking coal futures DJMcv1 surged 3.6% to 2,780 yuan a tonne and coke prices advanced 2.6% to 3,584 yuan per tonne.

Construction-used material steel rebar on the Shanghai Futures Exchange also gained, up 1.2% at 4,712 yuan a tonne.

“End consumption is expected to improve after Shanghai ends a lockdown,” said GF Futures. “But considering it takes time for the property sector to stabilise… it’s better not to be too optimistic.”

Hot rolled coils, used in the manufacturing sector, ended up 1% at 4,816 yuan per tonne.

Shanghai stainless steel futures dipped 0.3% to 18,330 yuan a tonne.

Source: Reuters

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