Iron ore prices climbed on Thursday, with the Dalian benchmark rising to a more than six-month high, as optimism over demand prospects in top steel producer China outweighed concerns about a surge in the country’s COVID cases.
The most-traded iron ore on China’s Dalian Commodity Exchange for May delivery ended daytime trade 1.6% higher at 845 yuan ($121.34) a tonne, after earlier touching 847.50 yuan, its highest since mid-June.
On the Singapore Exchange, the steelmaking ingredient’s benchmark January contract was up 1.3% at $114.60 a tonne, as of 0712 GMT.
Expectations of demand from Chinese steel mills ahead of the New Year and Spring Festival holidays provided additional support, particularly to near-term iron ore prices, analysts said.
“Iron ore inventory at steel mills is too low … As Spring Festival holidays are approaching, steel mills still have potential needs for further replenishment,” Huatai Futures analysts said in a note.
China will hold a week-long celebration of the Spring Festival, also known as the Lunar New Year, from Jan. 22.
Overall sentiment also remained positive, especially with prospects of steel demand in the property sector improving, analysts said.
A top adviser to the People’s Bank of China on Saturday called for thestrengthening of real estate policy in light of sluggish economic growth.
Steel benchmarks also edged higher. Rebar on the Shanghai Futures Exchange edged up 0.1%, hot-rolled coil gained 0.4%, while wire rod slumped 1.8%. Stainless steel rose 0.6%.
Mysteel Research & Consulting said it expects prices of major steel varieties to “stay rangebound against a high expectation for stimulus policies to exert positive effects on a stagnant market.”
It also expects disruptions due to a surge in COVID cases in China to curb economic activity until the first quarter of 2023.
Other Dalian steelmaking inputs fell, with coking coal and coke down 1.1% and 0.7%, respectively.
