Spot iron ore offers extended the rally as a recovery in China's housing prices boosted hopes for demand for the two commodities.
Data on Friday showed home prices in China climbed at their fastest pace in almost two years in February, with prices in smaller cities also marking their first increase since 2014.
This will boost sentiment among property developers. They will have more confidence in the property market so they will build more. That will support demand for steel and iron ore, analysts said.
While the sharp, double-digit increase in Chinese home prices last month were courtesy the big cities such as top performers Shenzhen, Shanghai and Beijing, Commonwealth Bank of Australia said prices in tier 3 cities and below rose 0.1%, marking the first increase since April 2014.
"However, a property inventory overhang of two-to-five years in lower-tier cities will likely remain a problem for China's property sector and weigh on commodity demand," the bank said.
"With China still focusing on transitioning its economy towards consumption and services, we think construction demand will remain weak in 2016, but if home price growth returns to China's lower tier cities, we could see demand strengthen."
The benchmark spot price stood at $58 a ton.
Grade % Fe |
Origin |
Product |
load port |
destination |
Mar 22, 2016: cfr ($/ton) |
Mar 21, 2016: cfr ($/ton) |
Mar 18, 2016: cfr ($/ton) |
Mar 17, 2016: cfr ($/ton) |
63.5/63 |
India |
Fines |
Vizag |
Qingdao |
58 |
57 |
56 |
53 |
62 |
India |
Fines |
FOB Vizag |
|
28 |
27 |
26 |
23 |
62 |
Australia |
PB |
Dampier |
Tianjin |
58 |
57 |
56 |
53 |
63.5 |
Brazil |
Fines |
Brazil |
China |
60 |
59 |
58 |
55 |
Source: Traders