Dalian iron ore edges up on China loan growth, SGX benchmark falls

Dalian iron ore futures edged up on Wednesday as China’s robust loan growth in the first quarter bolstered hopes for an economic rebound for the world’s biggest steel producer, though traders remained wary of growth and regulatory risks.

The most-traded September iron ore on China’s Dalian Commodity Exchange DCIOcv1ended daytime trade 0.3% higher at 788 yuan ($114.42) a tonne.

China’s new bank lending hit an all-time high in the first quarter, while broad credit growth quickened as the central bank kept up policy support for the economy after the lifting of stringent COVID-19 curbs.

Overall sentiment, however, remained guarded.

On the Singapore Exchange, the steelmaking ingredient’s benchmark May contract SZZFK3 was down 1.5% to $117.90 a tonne, as of 0700 GMT.

“How fast could these loans turn into investment activity? This should be clearer if the fixed asset investment grows faster than February’s rate and faster than the pre-COVID growth rate,” said Iris Pang, chief economist at ING Greater China.

China’s first-quarter GDP and economic activity data, due on April 18, should provide a clearer picture, she said.

Iron ore prices had climbed on Tuesday on worries that a cyclone heading toward top supplier Australia could disrupt shipments. Sinosteel Futures analysts, however, said the market seemed to have overreacted to it.

Traders were also mindful of regulatory risks after Chinese authorities repeatedly warned against excessive iron ore price speculation.

Dalian coking coal DJMcv1 and coke DCJcv1 rose 0.9% and 0.8%, respectively.

On the Shanghai Futures Exchange, rebar SRBcv1slipped 0.1%, hot-rolled coil SHHCcv1was almost flat, while stainless steel SHSScv1 climbed 2%. Wire rod SWRcv1 lost 1%.

Despite lacklustre downstream demand, daily crude steel output in China increased 29,600 tonnes, or 1%, over the first 10 days of April from late March to 3.08 million tonnes on average, the highest since mid-June 2021, based on Mysteel consultancy’s survey of 247 mills.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Sonia Cheema)