Iron ore futures rose on Tuesday, as resilient demand and improved prospects in top consumer China continued to support the market. The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 1.7% higher at 908 yuan ($125.47) per metric ton. The benchmark June iron ore on the Singapore Exchange rose 1.9% to $120.4 per ton, as of 0751 GMT.
The price increase follows China’s announcement of steps to support its crisis-hit property sector, including the central bank facilitating 1 trillion yuan ($138 billion) in extra funding and easing mortgage rules. “There’s still a lot of hot air built into iron ore prices and China’s wider industrial metals complex, which have been propped up by optimism and positive sentiment around the recent bouts of housing sector-related support packages,” said Atilla Widnell, managing director at Navigate Commodities.
However, Widnell added that while the measures are supportive of house prices and will address the wider wealth and value destruction created by excess inventory, “we do not believe it will be a silver bullet for construction activity and associated steel demand.” Chinese steel mill margins also remain weak, placing pressure on prices of steelmaking raw materials, according to ANZ Research.
Other steelmaking ingredients on the DCE were mixed, with coking coal edging up 0.1% and coke slipping 0.1%. Steel benchmarks on the Shanghai Futures Exchange were mostly up, with rebar, hot-rolled coil, and stainless steel prices rising, while wire rod slipped 0.1%.