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Dalian iron ore hits 11-week high on China stimulus prospects

Dalian and Singapore iron ore futures rose for a third session on Thursday, as weaker-than-expected industrial growth in top steel consumer China cemented views that Beijing would roll out more measures to shore up a shaky post-pandemic recovery.

Investment in the Chinese property sector, the country’s largest steel consumer, fell last month at the fastest pace since at least 2001, according to Reuters calculations based on National Bureau of Statistics data.

Property sales by floor area fell 19.7%, accelerating from an 11.8% drop in April.

The disappointing data had pressured the ferrous market in morning trade, said analysts, despite the central bank cutting the borrowing cost of its medium-term policy loans for the first time in 10 months.

The People’s Bank of China (PBOC) lowered the rate on 237 billion yuan of one-year medium-term lending facility (MLF) loans to some financial institutions by 10 basis points to 2.65%, in line with market expectations.

The most-traded September iron ore on the Dalian Commodity Exchange (DCE) DCIOcv1 ended daytime trading 1.43% higher at 815.5 yuan a metric ton, the highest since March 31.

The benchmark July iron ore SZZFN3 on the Singapore Exchange was 0.76% higher at $113.3 a metric ton, as of 0707 GMT, the highest since April 18.

“Demand (for iron ore) will remain resilient in the near term, as more mills have resumed operations stimulated by improved margins,” analysts at Sinosteel Futures said in a note.

Coking coal DJMcv1 and coke DCJcv1 jumped 3.88% and 1.42%, respectively.

Rebar on the Shanghai Futures Exchange SRBcv1 gained 0.59%, hot-rolled coil SHHCcv1 added 0.49% and wire rod SWRcv1 climbed 0.45%.

“Recent monetary stimulus shored up confidence and improved market sentiment, but steel fundamentals were little changed with weak demand continuously acting as a dragging factor, limiting the room for price rise,” said Sinosteel analysts.

Stainless steel SHSScv1 dropped 1.14%.

Source: Reuters

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