Iron ore futures rebounded on Monday, ending a two-session decline, as hopes of further Chinese stimulus overshadowed the top consumer’s uncertain economic prospects.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 1.57% higher at 808.5 yuan ($111.12) a metric ton.
The benchmark January iron ore SZZFF5 on the Singapore Exchange was up 1.05% at$104.4 a ton by 0728 GMT.
Iron ore prices have been supported above $100 a ton by expectations of more stimulus announcements from Beijing’sCentral Economic Work Conference, which is scheduled for Dec. 11-12, Westpac analysts said.
“Recent Chinese stimulus measures have revived demand for steel and thereby for iron ore, as property sales are showing some signs of improvement,” ANZ analysts said.
Inventories of the steelmaking ingredient fell to their lowest since August last week, they said.
Meanwhile, China’snew yuan loans are expected to have almost doubled in November from October, demonstrating firmer credit demand following Beijing’s recent stimulus measures.
Still, consumer inflation hit a five-month low in November and factory deflation persisted, suggesting limited impact from the government’s efforts to shore up faltering demand.
China is alsobracing for likely fresh tariffs from a second Trump presidency, suggesting more stimulus will be needed to boost fragile growth.
Further, bearish remarks by Vale’s CEO last week about adapting to demands for lower quality products hit market sentiment for iron ore, ANZ analysts said.
“The produce will shift to lower quality iron ore as margins remain under pressure.”
Vale SA VALE3.SA is one of the world’s biggest suppliersof iron ore.
Other steelmaking ingredients on the DCE were weaker on the day, with coking coal DJMcv1 and coke DCJcv1 down 2.05% and 0.55%, respectively.
Most benchmarks on the Shanghai Futures Exchange reversed earlier losses. Rebar SRBcv1 ticked up 0.03%, wire rod SWRcv1 added 0.23%, stainless steel SHSScv1 strengthened 0.43%, although hot-rolled coil SHHCcv1 dipped 0.11%.
Source: Reuters