Iron ore futures rose on Wednesday, supported by a softer U.S. dollar and resilient demand for the steelmaking ingredient, although weakness in China’s property sector capped gains.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 0.76% higher at 728.5 yuan ($101.10) a metric ton.
The benchmark June iron ore (SZZFM5) on the Singapore Exchange was up 0.45% at $99.85 a ton, as of 0704 GMT.
Demand for iron ore has exceeded expectations, particularly as steel mills continue to operate at high levels, broker Hexun Futures said.
The number of profitable blast-furnace steel mills is on the rise, with 60% of them reporting profits last week, according to Mysteel, a consultancy.
Iron ore prices were also supported by a weaker U.S. dollar, which edged lower on Wednesday, extending a two-day decline against major peers DXY .
A softer dollar makes greenback-priced commodities cheaper for holders of other currencies.
Meanwhile, market sentiment was braodly weighed down by China’s slowing factory output and retail sales numbers that missed expectations, while new home prices remained stagnant.
“While a sustained recovery looks unlikely in the medium term, the sharp contraction in China’s property market appears to have slowed,” said ANZ.
“This bodes well for steel demand during peak construction season,” it said. Spring is typically peak construction season for in China, ahead of rains starting in June.
On the supply side, the total volume of iron ore dispatched from mining firms in Australia and Brazil jumped 11.7% week-on-week to 27.1 million tons, Mysteel said.
Other steelmaking ingredients on the DCE declined on the day, with coking coal NYMEX:ACT1! and coke (DCJcv1) down 0.36% and 0.14%, respectively.
Most steel benchmarks on the Shanghai Futures Exchange gained ground. Hot-rolled coil EHR1! and wire rod (SWRcv1) both added 0.2%, stainless steel HRC1! inched up 0.08%, while rebar RBF1! edged 0.07% lower.
Source: Reuters