Iron ore rises on upbeat Chinese industrial data, demand hopes

DALIAN iron ore futures rose for the second consecutive session on Wednesday (Dec 27), as market participants reacted to robust industrial data amid expectation of economic stimulus and robust Chinese demand.

The most-traded May iron ore on China’s Dalian Commodity Exchange rose 0.5 per cent to 985.5 yuan (S$182.3) per metric ton at its closing, heading for a second consecutive year of gains.

On the Singapore Exchange, the benchmark January iron ore rose 0.5 per cent to US$140.22 a metric ton.

China’s November industrial profits posted double-digit gains as overall manufacturing improved, although soft demand continued to constrain business growth expectations, emboldening calls for more macro policy support.

The country’s top planning body said on Saturday it had identified a second batch of public investment projects under a bond issuance and investment plan announced in October to boost the economy.

Five of China’s largest state banks lowered interest rates on some deposits on Friday, offering the prospect of reduced lending costs at a time when the government is urging banks to support the economy.

In addition, analysts expect a probable surge in demand for iron ore in the following weeks as Chinese steelmakers replenish raw materials to maintain production needs over the Chinese Lunar New Year holiday break.

Two cities in northwestern China, Xian and Yinchuan, advised residents to stay indoors, limited heavy industrial production and halted coal processing, warning of heavy pollution over the coming days with thick fog expected.

Steel benchmarks on the Shanghai Futures Exchange were mixed. The most-active rebar contract was up 0.1 per cent, wire rod was up 0.2 per cent and stainless steel rose 0.3 per cent. Meanwhile, hot-rolled coil lost 0.1 per cent.

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On other steelmaking ingredients, Dalian coking coal fell by 1.8 per cent, while coke rose by 0.2 per cent. REUTERS