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Dalian iron ore extends rally as China industrial profits rebound

Dalian iron ore futures rose on Wednesday after data showed profits at industrial firms in China, the world’s top steel producer and consumer, had rebounded last month, although the steelmaking ingredient remained under pressure in Singapore.

The benchmark September contract on China’s Dalian Commodity Exchange ended morning trade 1.9% up at 741 yuan ($109.50) a tonne, extending its rally to a fourth straight session.

On the Singapore Exchange, the most-traded September contract was down 1.2% at $110.80 a tonne, as of 0345 GMT, off session-low of $108.40, as the excitement over news of a rescue fund for struggling Chinese property developers waned.

Profits at China’s industrial firms bounced back to growth in June, bolstered by the resumption of activity in major manufacturing hubs, though worries about a COVID-19 resurgence have cast a shadow over future factory output.

Construction steel rebar on the Shanghai Futures Exchange SRBcv1 rose 1.2%, while hot-rolled coil SHHCcv1 climbed 0.5%. Stainless steel fell 1.1%.

Dalian coking coal gained 1.7% and coke was up 1.9%.

But while more signs of an economic rebound for China emerged, caution is likely to prevail as concerns also remain about a crisis engulfing the country’s property developers, despite the reported Chinese rescue fund of up to 300 billion yuan.

“The market is unlikely to be overly excited about a quick resolution” of the property crisis in China, J.P.Morgan analysts said in a note.

Even if confirmed, they said the fund is unlikely to be a game changer to quickly end the housing market weakness.

“The process could take years, or even decades, and the eventual fund support from central and local governments could be much larger than the size being proposed at this moment,” the analysts said.
Source: Reuters

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