Dalian iron ore futures closed at a four-and-a-half-month high on Friday, marking their fourth consecutive weekly gain. Optimistic demand prospects and expectations of further policy support from Beijing boosted market sentiment.
The most actively traded September iron ore contract on the Dalian Commodity Exchange (DCE) rose 0.38% to 785 yuan ($109.34) per ton. The contract gained 3.66% for the week.
The benchmark August iron ore contract (SZZFQ5) on the Singapore Exchange fell 0.18% to $100.65 per ton by 07:40 GMT but still recorded a weekly increase of 1.38%.
ANZ analysts noted in a report that traders are optimistic about Beijing’s signals to address overcapacity, with expectations of improved steel profits and further market sentiment bolstered by hopes for new property stimulus measures.
ANZ also pointed out that declining iron ore and steel inventories have heightened expectations of restocking in the coming months.
Data from consultancy SteelHome showed that China’s portside iron ore inventories fell 0.76% week-on-week to 130.9 million tons as of July 18, providing additional price support.
Galaxy Futures stated that current iron ore demand remains resilient, with steel consumption in the manufacturing sector still at high levels.
The firm added that expectations of supply-side policy reforms have also provided additional support for prices.
Hexun Futures noted in a report that despite weak seasonal demand for finished products, steel demand has increased due to reduced supply from some blast furnaces undergoing mid-year maintenance.
Other steelmaking ingredients on the DCE also rose, with coking coal (NYMEX:ACT1!) and coke (DCJcv1) climbing 2.55% and 1.23%, respectively.
Steel benchmark contracts on the Shanghai Futures Exchange broadly advanced. Rebar (RBF1!) edged up 0.74%, wire rod (SWRcv1) gained 1.18%, hot-rolled coil (EHR1!) rose 0.91%, and stainless steel (HRC1!) increased 0.39%.
Source: Reuters
