Iron ore futures climbed on Tuesday to a near one-week high, aided by resilient near-term demand in top consumer China.
However, price gains were limited by prospects of a possible steel production restriction for a September 3 Beijing ceremony, commemorating the 80th anniversary of the end of World War Two.
Chinese steelmakers, especially those in the northern region, usually constrain production before big events to ensure air quality in Beijing, which could dent appetite for raw materials, including iron ore.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) TIO1! closed daytime trade 1.2% higher at 798.5 yuan ($111.13) a metric ton, the highest level since July 30.
The benchmark September iron ore (SZZFU5) on the Singapore Exchange was 0.69% higher at $102.2 a ton, as of 0709 GMT, after also hitting the highest since July 30 at $102.65 earlier.
Fundamentals of iron ore remained healthy amid firm demand, analysts at broker Shengda Futures said, supporting prices of the key steelmaking ingredient.
Average daily hot metal output, a gauge of iron ore demand, has been hovering around 2.4 million tons since April, even during the months of July and August when output typically contracts and demand is low.
Data from consultancy Mysteel showed that the output was around 2.21 million tons by the end of August in 2024.
Additionally, underpinning iron ore prices was also “hope that efforts to tackle the overcapacity issues in China’s steel industry will ultimately improve demand”, analysts at ANZ said in a note.
Coking coal NYMEX:ACT1!, another steelmaking ingredient, jumped by nearly 8% to hit the daily limit up amid expectations of reduced supply.
“Any sort of tiny news from the supply side could be amplified right now, driving a sharp price movement,” said a Singapore-based coal trader on condition of anonymity as he is not authorised to speak to the media.
Coke (DCJcv1) rose 3.16%.
Steel benchmarks on the Shanghai Futures Exchange advanced. Rebar RBF1! added 1.38%, hot-rolled coil EHR1! climbed 1.89%, wire rod (SWRcv1) rose 2.06% and stainless steel HRC1! gained 0.9%.
Source: Reuters