China iron ore futures jump to over 8-month high on improving consumption

[BEIJING] Benchmark iron ore futures in China jumped 4 per cent on Wednesday (Apr 6), hitting their highest level in more than 8 months, as trading resumed after the Tomb Sweeping Festival holidays.

The most-active iron ore futures on the Dalian Commodity Exchange, for September delivery, rose as much as 4.1 per cent to 945 yuan (S$201.9) per tonne, as demand at steel producers recovered from pandemic disruptions. They ended up 2.2 per cent at 927 yuan a tonne.

Spot prices of iron ore with 62 per cent iron content for delivery to China SH-CCN-IRNOR62 , compiled by SteelHome consultancy, stood at US$159.5 a tonne on Apr 2.

"Currently, the sluggish property market in China has dented steel and iron ore consumption... but iron ore destocking has started," analysts with Huatai Futures wrote in a note.

Portside iron ore inventories in China were at 155.6 million tonnes in the week ended Apr 1, down by 4 million tonnes from a week earlier and 3.3 per cent from the peak in mid-February, according to SteelHome.

With expectations that China will stabilise its economy and stimulate the real estate sector, iron ore demand is seen to be rising, the Huatai analysts said.

Other steelmaking ingredients on the Dalian bourse also gained. Coking coal, for May delivery, inched up 0.7 per cent to 3,241 yuan a tonne and coke prices leaped 2.8 per cent to 4,075 yuan per tonne at close.

Construction material steel rebar on the Shanghai Futures Exchange, for October delivery, increased 0.2 per cent to 5,121 yuan a tonne.

"Downstream demand (of steel rebar) has been postponed due to the pandemic," SinoSteel Futures said in a note, adding that consumption would recover amid relatively easy credit.

Hot-rolled coils futures, used in the manufacturing sector, dipped 0.1 per cent to 5,268 yuan a tonne.

The May contract of Shanghai stainless steel futures jumped 2.9 per cent to 20,830 yuan per tonne. REUTERS