Iron ore rebounds on improved China data, resilient demand

Iron ore futures rebounded on Monday as improved China economic data lifted sentiment dented by Beijing’s pledge last week to step up regulatory oversight following a price rally.

The most-traded January iron ore on China’s Dalian Commodity Exchange (DCE) ended daytime trading 2.41% higher at 851.5 yuan ($116.80) a metric ton.

The benchmark October iron ore on the Singapore Exchange was 3.19% higher at $116.95 a metric ton, as of 0708 GMT.

China’s consumer prices returned to positive territory in August while factory-gate price declines slowed, official data showed on Saturday, as deflation pressures eased amid signs of a stabilization in the economy.

Underpinning iron ore prices was steady demand as reflected by daily hot metal output.

“The blast furnace operating rate among mills continued to move up, while a turnaround (of reduction) in daily hot metal output is not seen yet,” analysts at Huatai Futures said in a note.

Daily hot metal output among mills surveyed climbed by 0.53% on the week to 2.48 million tons in the week to Sept. 8, the highest since October 2020, data from consultancy Mysteel showed.

Other steelmaking ingredients also advanced, with coking coal DJMcv1 and coke DCJcv1 on the DCE up 3.7% and 1.73%, respectively.

Some Chinese coking plants proposed a hike of between 100 yuan and 110 yuan per ton in coke offer prices from Monday, citing rising production costs.

Some analysts expect coking plants to see a failure in this round of wrestling with steel mills.

“We should also be careful about any downside risks (for raw materials) as long as the steel market remains weak,” said Cheng Peng, a Beijing-based analyst at Sinosteel Futures.

Most steel benchmarks on the Shanghai Futures Exchange recouped losses on higher raw material costs, although demand remained sluggish despite the peak construction season.

Rebar SRBcv1 was little changed, hot-rolled coil climbed 0.21%, and stainless steel added 0.13%.

Wire rod SWRcv1 tumbled 3.31%.
Source: Reuters (Reporting by Amy Lv and Dominique Patton in Beijing; Editing by Janane Venkatraman and Subhranshu Sahu)