Iron ore futures continued their upward trajectory on Friday, signaling a potential weekly gain driven by an optimistic demand outlook in China, the leading consumer of the commodity, and improved near-term fundamentals. However, mixed data signals have prompted caution among investors, limiting the extent of the gains.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) concluded morning trade with a 1.22% increase, reaching 828 yuan ($114.42) per metric ton. This marked the fifth consecutive session of gains, with a weekly rise of 7.3%. Similarly, the benchmark May iron ore on the Singapore Exchange rose by 0.58% to $108.85 per ton, representing a 4.4% increase for the week.
Recent surveys have indicated a 0.5% increase in average daily hot metal output to 2.25 million tons as of April 12, while iron ore stocks at major ports rose by 0.2% to 144.87 million tons. Analysts at Galaxy Futures anticipate a continuous uptick in hot metal output in the coming weeks, with an expected decline in portside ore stocks to approximately 130 million tons in the second quarter.
Furthermore, the quicker-than-expected progress in pledged equipment upgrades has bolstered sentiment and lent support to prices. China’s commitment to providing robust financing for firms engaged in equipment upgrades and trade-ins of consumer goods serves as the latest effort to stimulate domestic demand.
In line with these developments, other steelmaking ingredients on the DCE, such as coking coal and coke, experienced notable increases of 3.38% and 4.6%, respectively. Additionally, steel benchmarks on the Shanghai Futures Exchange demonstrated mostly higher trends and were poised for weekly gains.