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Iron ore hits one-week high on better-than-expected China growth

Dalian and Singapore iron ore futures climbed to one-week highs on Tuesday, as better-than-expected economic growth in China for the March quarter boosted investor sentiment.

China’s gross domestic product grew 4.5% year-on-year, faster than 2.9% in the previous quarter, and beating analyst forecasts for a 4.0% expansion.

The most-traded September iron ore on the Dalian Commodity Exchange (DCE) ended daytime trading 2.08% higher at 784 yuan ($114.04)a tonne.

On the Singapore Exchange, the benchmark May iron ore SZZFK3 was up 0.75% at $117.65 a tonne, as of 0710 GMT, the highest since April 12.

“Solid demand provided certain support to iron ore prices, but there are downside risks stemming from thin steel margins. Also, daily hot metal output may fall after having hit a peak in March,” analysts at Sinosteel Futures said in a note.

Weather, which affects the pace of shipments, will not have much effect on the overall supply, they added.

Iron ore prices gained some ground last week on worries about potential supply disruptions in Australia due to a tropical cyclone. However, the cyclone spared some populated areas including Port Hedland, the world’s largest iron ore export hub.

The steelmaking ingredient had been facing downward pressure since late March, partly due to weaker-than-expected steel demand during China’s peak construction activity season.

Other steelmaking ingredients including coking coal and coke also recorded gains on Tuesday. Coking coal DJMcv1 rose 2.97% and coke DCJcv1 gained 2.55%.

Rebar on the Shanghai Futures Exchange SRBcv1 climbed 1.1% to 3,950 yuan a tonne, hot-rolled coil SHHCcv1 moved up 1%, wire rod SWRcv1 advanced 0.82%, and stainless steel SHSScv1 rose 0.06%.

Around 78% of the surveyed electric arc furnace-based steelmakers in South China’s Guangdong province reduced their production as of April 17 due to losses, according to consultancy Mysteel.

Source: Reuters

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