Iron ore gains on demand optimism after China eases COVID curbs
Iron ore futures rebounded on Thursday as higher imports into China suggested improving demand, with easing COVID restrictions in the country boosting hopes for a rise in consumption.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange advanced 1.4% to 790 yuan ($113.37) a tonne.
Dalian iron ore prices have risen about 30% since the beginning of November, boosted by China’s ramped-up policy support for ailing domestic property developers and easing of its COVID-19 curbs.
China on Wednesday announced the most sweeping changes to its strict anti-COVID-19 regime since the pandemic began three years ago, allowing infected people with mild symptoms to quarantine at home and dropping testing for people travelling domestically.
Data also showed Chinese imports of iron ore rose 4.1% in November from the previous month as buyers stocked up before the end of the year, in anticipation of Beijing’s measures to support the struggling property market.
ANZ analysts said the data indicated signs of rising demand.
On the Singapore Exchange, the steelmaking ingredient’s front-month January contract was up 2.6% at $108.85 a tonne, as of 0733 GMT.
“Beijing’s gradual COVID-19 easing and policy support for the beleaguered property sector has boosted market sentiment, lending support to iron ore prices,” Citi analysts said in a note on Tuesday.
They raised their 0-3 month price forecast to $120 a tonne, from $110 a tonne previously.
“In a bullish scenario, iron ore prices could rally towards $150 a tonne if China announces meaningful credit easing over the next 3-6 months and/or an accelerated reopening.”
The most-active rebar contract on the Shanghai Futures Exchange increased 0.8% to 3,839 yuan a tonne, hot-rolled coil rose 0.6% to 3,945 yuan a tonne, wire rod edged up 1.3% at 4,588 yuan a tonne, while stainless steel fell 0.1% to 17,265 yuan a tonne.
Dalian coking coal rose 0.1% to 1,822 yuan a tonne and Dalian coke rose 2.5% to 2,898.50 yuan a tonne.
Spot iron ore for delivery to China eased slightly to $108 a tonne but was still 33% higher than the beginning of November, according to SteelHome consultancy.
Source: Reuters (Reporting by Mai Nguyen in Hanoi; editing by Uttaresh.V and Vinay Dwivedi)