Iron ore rebounds ahead of Chinese loan data

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Iron ore futures rose on Thursday, with the Dalian benchmark hitting a one-week high after two days of declines, as sentiment turned upbeat ahead of the release of Chinese lending data, a key indicator of support for economic growth.

The most-traded iron ore, for May delivery, on China’s Dalian Commodity Exchange ended morning trade 2.4% higher at 861.50 yuan ($126.92) a tonne, after trading at 865.50 yuan earlier in the session, its highest since Feb. 2.

On the Singapore Exchange, the steelmaking ingredient’s benchmark March contract was up 1.2% at $122.80 a tonne. It hit a three-week low of $118 in the previous session.

Yuan loans extended by Chinese banks likely surged to a record high in January as the central bank moved to shore up growth in the world’s second-biggest economy following a lifting of pandemic controls, a Reuters poll showed.

Iron ore, which has been propped up by top steel producer China’s policy support for its ailing property sector and dismantling of COVID-19 restrictions, was subdued in recent days as traders re-assessed demand prospects.

The January new loan data are expected to be released between Feb. 9 and Feb. 15.

“Chinese banks usually book loans at the beginning of the year. Any amount over CNY 4.37 trillion will suggest strong loan demand from corporates that expect a strong recovery in the economy,” ING economists said in a note.

Other Dalian steelmaking inputs were also firmer, with coking coal up 1.3% and coke rising 1.7%.

Coking coal advanced despite news that at least two vessels carrying Australian coal have arrived in China, with several more on the way, after an unofficial ban on imports lifted.

Steel benchmarks also rose, with rebar on the Shanghai Futures Exchange up 1.5%, hot-rolled coil climbing 1.8%, and wire rod adding 0.6%. Stainless steel SHSScv1 slipped 0.3%.

Source: Reuters

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