Iron ore futures recovered on Thursday amid market talks of more China property sector support, although concerns of oversupply and weak demand capped gains.
The most-traded September iron ore on China’s Dalian Commodity Exchange ended daytime trade 1.7% higher at 849.5 yuan ($118.25) per metric ton, snapping a three-day losing streak.
On the Singapore Exchange, the benchmark August iron ore contract was up 2.1% at $114.7 per metric ton as of 0710 GMT.
“Bulls are now hanging their hats on rumours that regulators are weighing up plans to ease mortgage restrictions to get the economy’s growth engine restarted,” said Atilla Widnell, managing director of Navigate Commodities.
“That said, the authorities are forgetting just how damaged and broken consumer confidence is after years of zero-COVID restrictions and delayed property projects,” Widnell added.
On the supply side, seaborne iron ore inventories increased roughly 3.4% annually in the first 28 weeks of 2023, according to ship-tracking data, adding to oversupply concerns both in China and globally, putting downward pressure on prices, Commonwealth Bank of Australia said.
Any stimulus package will likely be limited given concerns over high levels of local government debt, leaving steel demand challenged through H2 2023, the bank added.
On Wednesday, Rio Tinto RIO.AX, RIO.Lflagged concerns about a global economic slowdown as it reported a raft of production issues across operations, but said its iron ore production should be at the upper end of its expectations for the year.
Meanwhile, BHP Group BHP.AX reported its highest-ever annual iron ore production, helped by the continued ramp-up at its South Flank operations in Western Australia, but said it faced rising costs.
Steel benchmarks were up. The most-active rebar contract on the Shanghai Futures Exchange SRBcv1 climbed 1.4%, hot-rolled coil SHHCcv1 strengthened 1.4%, wire rod SWRcv1 gained 1.1% and stainless steel SHSScv1 jumped 2.8%.
Other steelmaking ingredients also spiked, with Dalian coking coal DJMcv1 coke DCJcv1 advancing 4% and 2.4% respectively.
Source: Hellenic Shipping News
