Dalian iron ore futures hit five-week highs on Wednesday and the Singapore benchmark rose for a third straight day, buoyed by China’s additional measures to spur economic growth.
The top parliament body in China, the world’s biggest producer and consumer of steel, has approved a 1 trillion yuan ($137 billion) sovereign bond issuance, with thestepped-up stimulus sharply raising its budget deficit.
The January iron ore contract onChina’s Dalian Commodity Exchange ended daytime trade 3.3% higher at 872 yuan ($119.22) per metric ton,after earlier hitting 878.50 yuan.
On the Singapore Exchange, the steelmaking ingredient’s benchmark November contract was up 0.9% at $117.10 per ton, as of 0700 GMT.
Chinese steel price benchmarks also advanced, with rebar SRBcv1 rising 2.1%,hot-rolled coil SHHCcv1 adding 1.7%, wire rod SWRcv1 and stainless steel SHSScv1 climbing 0.9% each.
“Market sentiment has been boosted in the short term, and prices are expected to fluctuate on the strong side,” Huatai Futures analysts said in a note.
Steelmaking ingredients on the Dalian exchange also extended gains, with coking coal DJMcv1 and coke DCJcv1 up 5.5% and 4.8%, respectively.
Baoshan Steel 600019.SS said it expected China’s steel demand to find strong support from the infrastructure sector in the last quarter of this year and in 2024, helped by the latest stimulus.
However, gains could be curtailed by persistent worries about China’s property sector and unfavourable margins for mills hit by weak sales and high raw material costs, which have prompted them to curb production, analysts said.
“The onshore markets have a history of running with ‘good news’ for a number of sessions before reality and gravity sets in,” said Robert Rennie, head of financial market strategy at Westpac.
“I tend to see that happening here given that this fresh policy initiative is weighted into next year suggesting we are still looking at weak demand for iron ore through Q4,” he added.
Source: Hellenic Shipping News
