Benchmark iron ore futures in China jumped 4% on Wednesday, hitting their highest level in more than eight months, as trading resumed after the Tomb Sweeping Festival holidays.
The most-active iron ore futures on the Dalian Commodity Exchange DCIOcv1, for September delivery, rose as much as 4.1% to 945 yuan ($148.49) per tonne, as demand at steel producers recovered from pandemic disruptions. They ended up 2.2% at 927 yuan a tonne.
Spot prices of iron ore with 62% iron content for delivery to China SH-CCN-IRNOR62, compiled by SteelHome consultancy, stood at $159.5 a tonne on April 2.
“Currently, the sluggish property market in China has dented steel and iron ore consumption… but iron ore destocking has started,” analysts with Huatai Futures wrote in a note.
Portside iron ore inventories in China were at 155.6 million tonnes in the week ended April 1, down by 4 million tonnes from a week earlier and 3.3% from the peak in mid-February, according to SteelHome.
With expectations that China will stabilise its economy and stimulate the real estate sector, iron ore demand is seen to be rising, the Huatai analysts said.
Other steelmaking ingredients on the Dalian bourse also gained. Coking coal DJMcv1, for May delivery, inched up 0.7% to 3,241 yuan a tonne and coke prices DCJcv1 leaped 2.8% to 4,075 yuan per tonne at close.
Construction material steel rebar on the Shanghai Futures Exchange SRBcv1, for October delivery, increased 0.2% to 5,121 yuan a tonne.
“Downstream demand (of steel rebar) has been postponed due to the pandemic,” SinoSteel Futures said in a note, adding that consumption would recover amid relatively easy credit
Source: Reuters