Iron ore futures hit two-week highs on China stimulus

Dalian and Singapore iron ore futures rose to two-week highs on Friday, posting their biggest weekly gains in six weeks, after top steel producer China announced more steps to support its COVID-ravaged economy.

Also aiding sentiment, a lower-than-expected August inflation reading in China sparked hopes for further central bank policy easing.

Most-traded January iron ore on the Dalian Commodity Exchange closed 3.7% higher at 720.50 yuan ($103.92) a tonne, after touching its strongest since Aug. 29 at 724.50 yuan earlier in the session.

Dalian iron ore rose 7.4% this week, ahead of the Sept. 10-12 Mid-Autumn Festival holiday in China.

On the Singapore Exchange, the steelmaking ingredient’s benchmark October contract was up 3.2% at $103.25 a tonne, as of 0700 GMT.

China’s intensified support for an ailing property market supported ferrous commodities, along with “an aggressive push to boost infrastructure spending as Beijing looks to support growth in the face of COVID-19 lockdowns,” ANZ commodity strategists said in a note.

After policymakers signalled a renewed sense of urgency to shore up the economy, China’s cabinet on Thursday announced more steps to spur investment, such as in new infrastructure projects.

In the spot market, increased demand pushed the benchmark 62%-grade iron ore bound for China up more than 3% this week to $100.50 a tonne, as of Thursday, SteelHome consultancy data showed.

“The resumption of production in some steel mills has led to a continuous recovery in the average daily production of molten iron,” Sinosteel Futures analysts said in a note.

“The short-term demand remains at a moderately high level, but the room for increased demand is limited.”

Rebar on the Shanghai Futures Exchange SRBcv1 rose 2.1%, hot-rolled coil gained 1.2%, and stainless steel advanced 3%.

Other Dalian steelmaking inputs also rose, with coking coal DJMcv1 and coke up 2.6% and 2.3%, respectively.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Sherry Jacob-Phillips and Subhranshu Sahu)