Iron ore price up despite lackluster demand outlook
September’s top-traded iron ore contract on China’s Dalian Commodity Exchange closed wobbly day trade up 1% at 736 yuan ($109.90) a ton. The benchmark contract fell 11% this week, its highest since mid-February.
After back-to-back losses, prices rebounded on Thursday after Chinese President Xi Jinping pledged to take more effective measures to achieve the country’s economic and social development goals.
Xi’s remarks also supported the spot market, with the 62% benchmark iron ore destined for China trading at $117.50 a tonne on Thursday. It had fallen to $112.50 the previous day, the lowest since Dec. 10, according to data from consultancy SteelHome.
While “market confidence has been restored to some degree,” analysts at Sinosteel Futures said the absence of any additional, specific economic stimulus from Beijing will limit any price gains for now.
In China’s steel-producing hub, the city of Tangshan, 56 of 126 blast furnaces were closed for maintenance, according to Sinosteel, as factories struggled to cope with falling margins amid low demand and high inventories.
Covid-19 restrictions, which have put downward pressure on the real estate sector, and disruptions to construction activity caused by adverse weather conditions are additional headwinds for China’s gigantic steel sector.
(With files from Reuters)