Iron ore set for fifth weekly rise, powered by strong steel prices
Iron ore futures advanced in Asia on Friday, on course for a fifth straight week of gains, as anti-pollution steel output curbs in top producer China and strengthening global steel demand propelled prices to record highs.
September iron ore on China’s Dalian Commodity Exchange ended daytime trade 1.2% higher at 1,104.50 yuan ($170.11) a tonne. The most-active contract has risen 4.3% this week.
The steelmaking ingredient climbed 1.3% to $181.35 a tonne on the Singapore Exchange by 0711 GMT.
Steel prices on the Shanghai Futures Exchange extended gains, with construction steel rebar rising 1.7% to 5,299 yuan a tonne, just below a record-high 5,300 yuan.
Hot-rolled coil, used in car bodies and home appliances, climbed 0.9% to 5,590 yuan a tonne, after touching a record-peak 5,597 yuan.
“This is a classic bull-market cycle for steel,” analysts at J.P. Morgan said in a note. “As the world ex-China emerges from the pandemic and reacts to stimulus measures, demand is recovering at a fast pace.”
That also bodes well for China, which is the world’s top exporter of steel materials and steel-based products.
Talks about further steel production curbs in China also helped steel prices skyrocket in Asia, with hot-rolled coil soaring to as high as $900 a tonne, J.P. Morgan analysts said.
Following curbs in the top steelmaking city of Tangshan, Handan city in China’s steel hub Hebei province will implement production control measures in its steel and coking sectors from April 21 to June 30, the state-backed China Metallurgical News reported.
Elevated steel prices have boosted Chinese mills’ profit margins, prompting them to ramp up output and purchases of iron ore.
Spot iron ore in China traded at $187 a tonne on Thursday, easing from Wednesday’s decade-high $188.50, based on SteelHome consultancy data.’
Shanghai stainless steel gained 0.8%.
Dalian coking coal added 0.2%, while coke edged up 0.1%
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Shailesh Kuber and Richard Pullin)