China’s iron ore futures on Tuesday hit the highest level since the index was launched in 2013, buoyed by upbeat demand prospects for the steelmaking raw material in the world’s biggest producer and consumer of steel.
The most-traded September iron ore contract on the Dalian Commodity Exchange jumped as much as 4.6% to 924.5 yuan ($134.44) a tonne.
Monday’s data showing China’s industrial output growth hit a forecast-beating 6.3% in June on an annual basis, supported by a recovery in investments, helped prop up overall market sentiment, analysts said.
“The increase in production especially in commodities has resulted in some increase in inventory. It also reflects producers’ confidence (over demand prospects),” said Helen Lau, metals and mining analyst at Argonaut Securities in Hong Kong.
Benchmark spot 62% iron ore for delivery to China SH-CCN-IRNOR62 rose 0.8% to $121.50 a tonne on Monday, edging closer to the five-and-a-half-year high of $126.50 hit on July 3, according to data tracked by SteelHome consultancy.
“We remain positive about iron ore,” said Lau, along with coking coal, another steelmaking ingredient.
FUNDAMENTALS
* Tight supply conditions have also been providing support to iron ore, with imported stocks at China’s ports hovering near the lowest level since early 2017.
* The port inventory fell to 115.35 million tonnes, as of July 12, from 115.6 million tonnes a week before, data compiled by SteelHome consultancy showed. SH-TOT-IRONINV
* The most-active October construction steel rebar contract on the Shanghai Futures Exchange rose as much as 2.5% to a one-week-high 4,064 yuan a tonne.
* Hot-rolled steel used in cars and home appliances climbed 2.1% to 3,919 yuan a tonne.
* Other steelmaking inputs also traded firm on the Dalian exchange, with coking coal up as much as 0.7% at 1,409.5 yuan a tonne while coke gained as much as 1.8% to 2,184 yuan.
* Global miner Rio Tinto reported a 3.5% drop in second-quarter iron ore shipments on Tuesday, as disruptions caused by a cyclone in late March squeezed output in the April-June period.
Source: Reuters