Dalian iron ore futures climbed to their highest levels in 15 weeks on Thursday, underpinned by renewed optimism around prospects of further stimulus to support China’s faltering economic recovery, but prices in Singapore were subdued.
The steelmaking ingredient’s most-traded September contract on China’s Dalian Commodity Exchange DCIOcv1 ended daytime trade 0.9% higher at 830.50 yuan ($114.71) per metric ton, after earlier hitting 835 yuan, its strongest since March 16.
On the Singapore Exchange, however, benchmark July iron ore SZZFN3 was down 0.4% at $112.95 per metric ton, as of 0743 GMT.
Other steelmaking ingredients also rose, with coking coal DJMcv1 and coke DCJcv1 on the Dalian exchange up 0.6% and 0.4%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were mixed, with rebar SRBcv1 up 0.2%, hot-rolled coil SHHCcv1 down 0.2%, while wire rod SWRcv1 gained 0.6% and stainless steel SHSScv1 dipped 1.2%.
Premier Li Qiang said on Tuesday China will roll out more effective policy measures to expand domestic demand, even as he pointed out that domestic economic growth has picked up in the current quarter.
Market reaction to China’s stimulus signals has been mixed, with some traders pondering how far Beijing is willing to go in supporting particularly the struggling property sector, and with economic indicators in the first five months of 2023 generally disappointing.
Some of the latest analyst outlook for steel demand in China, the world’s top steel producer and metals consumer, also do not offer relief.
“Domestically, new favourable policies are not expected to be introduced in the near term and the effectiveness of previous policies in improving steel demand remains to be (seen),” industry consultancy and data provide Mysteel said in its weekly outlook.
China, however, is set to export the most steel this year since 2016, according to analysts, as the weakening yuan and competitive prices help it offload surplus metal at home.
Source: Reuters