Iron ore futures gained on Wednesday, as hopes of fresh stimulus from top consumer China outweighed concerns over a gloomy outlook stemming from growing supply and diminishing demand.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) TIO1! closed daytime trade 1.38% higher at 774 yuan ($108.66) a metric ton, its highest since November 7.
The benchmark December iron ore (SZZFZ5) on the Singapore Exchange rose 1.31% to $102.85 a ton as of 0738 GMT, also the highest since November 7.
Hopes of more stimulus revived after China’s central bank said on Tuesday it would maintain “appropriately loose” monetary policy, keep liquidity ample while improving its policy transmission, as the economy still faces risks and challenges.
The positive policy signal came after October exports in the world’s second-largest economy suffered the worst downturn since February as tariffs hammered U.S. demand.
A wave of restocking among steelmakers, whose stocks hovered at a pretty low level, also lent some support to prices, said a Shanghai-based analyst on condition of anonymity as she is not authorised to speak to media.
The key steelmaking ingredient’s price rise defied analysts’ estimates as the Simandou project in Guinea began production, cementing prospects of rising supply amid faltering China demand, weighing on price outlook.
Fundamentals of iron ore swung to the weak side amid rapid increase in imports, swelling inventories and dwindling China demand, analysts at broker Galaxy Futures said.
Other steelmaking ingredients, coking coal NYMEX:ACT1! and coke (DCJcv1), slipped 1.85% and 1.89%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar RBF1! rose 0.13%, hot-rolled coil EHR1! added 0.22%, wire rod (SWRcv1) was little changed and stainless steel HRC1! lost 0.76%.
Source: Reuters