Dalian iron ore futures rose more than 3% on Friday and headed for their best week in 11 months, as China pledged to boost fiscal support for its economy and concerns mounted about tightness in supply of the steelmaking commodity from Brazil.
The Dalian Commodity Exchange’s most-traded iron ore for delivery in September climbed as much as 3.2% to 734 yuan ($103.18) a tonne in early trade, extending its rally into the eighth straight session.
The Dalian benchmark was set to mark its biggest weekly gain since mid-June last year. On the Singapore Exchange, the front-month contract was up 0.8% at $96.29 a tonne.
China, the world’s top steel producer and consumer, will step up fiscal spending to support its coronavirus-ravaged economy, according to Premier Li Keqiang’s work report released on Friday at the start of the annual parliament meeting.
Increased domestic iron ore demand and hopes of more infrastructure spending by the Chinese government have fuelled the rally in both futures and spot prices.
Benchmark 62% iron ore bound for China rose for a fourth consecutive day to hit $98.70 a tonne on Thursday, the highest since Aug. 6, SteelHome consultancy data showed. SH-CCN-IRNOR62
“Iron ore demand continued to grow at a high rate,” Sinosteel Futures Co Ltd said in a note, citing consultancy Mysteel’s survey of 247 Chinese steel mills with a higher blast furnace operating rate this week of 90.49%, and declining port stockpiles.
Offering support were potential further disruptions in supply from Brazil, where the coronavirus infections have rapidly accelerated, hitting key mining provinces.