Iron ore futures prices continued their upward trajectory for a third consecutive day on Wednesday, supported by signs of increasing construction activity in China, the world’s largest consumer of the commodity. However, investor caution prevailed regarding the extent of the demand recovery.
The most actively traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) climbed 1.5% to 814 yuan ($112.56) per metric ton by 0249 GMT, following a more than 5% surge on Tuesday.
Meanwhile, the benchmark May iron ore contract on the Singapore Exchange inched up by 0.14% to $107.65 per ton by 0239 GMT, following a over 3% increase in the previous session.
Analysts at Shengda Futures noted marginal improvements in iron ore fundamentals and anticipated that the average daily hot metal output, a key indicator for monitoring ore demand, would surpass 2.3 million tons by the end of April. They highlighted potential slowdowns in overseas ore shipments due to maintenance activities initiated by miners to meet quarterly targets.
Soochow Futures analysts echoed an improved ore demand outlook post the bottoming out of hot metal output, but cautioned that further price increases might face pressure as the extent of hot metal output growth remains uncertain.
On the DCE, other steelmaking ingredients also saw gains, with coking coal and coke rising by 1.72% and 1.57%, respectively.
Steel benchmarks on the Shanghai Futures Exchange exhibited mixed movements, with rebar (SRBcv1) edging up by 0.22%, hot-rolled coil remaining stable, wire rod dipping by 0.5%, and stainless steel adding 0.47%.
Analysts at Chaos Ternary Futures highlighted expectations for improved construction steel consumption in the second quarter driven by the acceleration of special bond issuance compared to the first quarter. Special bonds are typically utilized to finance infrastructure projects.