Iron ore futures rallied on Thursday to their highest in five weeks, underpinned by better-than-expected economic data and the latest batch of stimulus measures in China, the world’s largest consumer of the steelmaking ingredient.
The most-traded iron ore futures on China’s Dalian Commodity Exchange (DCE) ended daytime trading 3.54% higher at 849 yuan ($116.47) a metric ton, the highest since Aug. 1.
The benchmark iron ore on the Singapore Exchange was 1.9% higher at $116.6 a metric ton, as of 0731 GMT, the highest since July 26.
“The latest flurry of macroeconomic stimulus largely boosted sentiment,” analysts at Huatai Futures said in a note.
“If steel consumption improves further, demand for iron ore from steelmakers will be sustained.”
The official purchasing managers’ index (PMI) in August rose to 49.7 from 49.3 a year before, according to the National Bureau of Statistics, staying below the 50-point level demarcating contraction from expansion. The reading was above a forecast of 49.4.
China will unblock financing channels of stocks, bonds and loans for private enterprises and support their listing and refinancing, its central bank said.
Also, two big cities – Guangzhou and Shenzhen – eased mortgage curbs on Wednesday after Chinese authorities called on cities to broaden the definition of first-home mortgage as part of a string of other measures to revive the troubled property market.
Other steelmaking ingredients also advanced, with coking coal DJMcv1 and coke DCJcv1 on the DCE up 3.26% and 2.13%, respectively.
Steel benchmarks on the Shanghai Futures Exchange strengthened as well. Rebar SRBcv1 climbed 1.27% to 3,740 yuan a ton, hot-rolled coil SHHCcv1 rose 1.89%, wire rod SWRcv1 nudged up 0.07% and stainless steel SHSScv1 added 0.93%.
Daily crude steel output in China will likely reach 3 million tons in August, consultancy Mysteel said in a report on Wednesday.
China’s daily crude steel output in July stood at 2.93 million tons, down 3.6% on the month, official data showed.