Dalian and Singapore iron ore futures continued uptrend on Wednesday, but gains narrowed as some investors retreated to the sidelines on weak industrial data in top consumer China, and expectations of fresh stimulus measures faded.
The most-traded September iron ore on the Dalian Commodity Exchange (DCE) ended daytime trading 2.47% higher at 830.5 yuan a metric ton, the highest since March 15.
The benchmark July iron ore on the Singapore Exchange was 0.78% higher at $113.45 a metric ton, the highest since June 19.
Profits at China’s industrial firms tumbled 18.8% year-on-year in the first five months of 2023, extending a 20.6% contraction in the January-April period, data from the National Bureau of Statistics (NBS) showed on Wednesday.
The futures rallied over 4% on Tuesday, as market sentiment was boosted after Chinese Premier Li Qiang said the country would roll out more effective policy measures to expand domestic demand.
Helping eye-catching gains was market chatter that the world’s second-largest economy will announce some stimulus policies later in the day as part of efforts to prop up its bumpy property market.
Nothing came out throughout the day, however, raising doubts on whether the long-waited supportive policies will come.
“The rising momentum was typically strong on prospects of further macroeconomic stimulus measures, but it lost steam when facing weak reality,” said Cheng Peng, a Beijing-based analyst at Sinosteel Futures.
That said, hopes of more supportive measures on the way were raised again in the afternoon session after news came that around 20 cities eased restrictions on house buying, official media reported.
Other steelmaking ingredients, coking coal DJMcv1 and coke DCJcv1, climbed by 0.84% and 1.07%, respectively.
Similarly, steel narrowed gains. Rebar on the Shanghai Futures Exchange SRBcv1 rose 0.76%, hot-rolled coil SHHCcv1 gained 0.55%, wire rod SWRcv1also grew 0.55% and stainless steel SHSScv1 ticked up 0.2%.
“Spot transactions of steel products weakened this morning, compared to the previous day and steel inventories have begun to pile up, weighing on sentiment,” said Yu Chen, a Shanghai-based senior analyst at consultancy Mysteel.
Source: Reuters
