Iron ore seesaws as traders weigh demand prospects in China
IRON ore futures swung back and forth on Wednesday (Feb 8), with the Singapore benchmark briefly trading below US$120 a tonne, as traders reassessed near-term demand prospects in top steel producer China.
Benchmark March iron ore on the Singapore Exchange was up 0.1 per cent at US$121.10 a tonne, as of 0715 GMT, after falling 2.5 per cent to US$118 a tonne earlier in the session, its weakest since Jan 17.
On China’s Dalian Commodity Exchange, the steelmaking ingredient’s most-active May contract ended daytime trade 0.7 per cent higher at 848 yuan (S$165.5)a tonne. It earlier dropped 1.1 per cent to 833 yuan.
China’s stepped-up policy support for its ailing property sector and dismantling of strict Covid-19 restrictions had pushed iron ore and steel prices to multi-month highs in January.
“Prospects of strong iron ore demand due to China’s reopening and various supportive measures for the property market are well reflected in the recent price rally in iron ore,” ANZ commodity strategists said in a note.
“Nevertheless, property market indicators are still subdued. While recent developments are boding well for demand, we expect iron ore prices to consolidate before seasonal demand kicks in.”
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Iron ore was supported after the world’s largest miner BHP Group said it had suspended its Western Australian iron ore operations for a day after a worker was struck by a train at its Port Hedland facility.
But increasing portside iron ore inventory in China, which as of last week was the biggest since December based on SteelHome consultancy data, also kept trading subdued.
The real recovery in Chinese iron ore demand could be seen in the second quarter, analysts said.
Other Dalian steelmaking inputs were firmer, with coking coal up 1.2 per cent, while coke gained 2 per cent.
Steel benchmarks also gained, with rebar on the Shanghai Futures Exchange up 1 per cent, hot-rolled coil gaining 1.2 per cent, and wire rod climbing 0.4 per cent. Stainless steel slipped 0.4 per cent. REUTERS
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