Iron ore futures prices rebounded on Thursday, snapping a five-day losing streak, as sentiment was lifted by a combination of factors. These include some portside restocking ahead of the upcoming Dragon Boat Festival in China, as well as market chatter about a possible steel output cut in the world’s top producer and consumer.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended the daytime session 0.96% higher at 839.5 yuan ($115.85) per ton. The benchmark July iron ore on the Singapore Exchange also jumped 1.49% to $108.7 per ton as of 0809 GMT, after hitting an intraday high of $109.8 per ton.
Analysts noted that steelmakers typically stock up on portside ore cargoes ahead of the Dragon Boat Festival, which falls on June 8-10 this year. Data from consultancy Mysteel showed that transaction volumes at major ports climbed 35% day-on-day to 1.17 million metric tons on Wednesday.
Additionally, a boost in sentiment was filtered through to the iron ore market from a strengthening steel market, amid market chatter of a crude steel output cut of up to 20 million tons in China. The National Development and Reform Commission, which had announced plans to continue managing steel output in 2024, did not immediately respond to a Reuters request for comment.
Most steel benchmarks on the Shanghai Futures Exchange, including rebar, hot-rolled coil, and wire rod, ended the session higher. A Shanghai-based analyst, speaking on the condition of anonymity, attributed the price rise to the talk of steel output cuts as well as a weaker U.S. dollar.
However, analysts cautioned that diminishing demand and high supplies continued to act as a headwind for iron ore, with the daily crude steel output among key members under the China Iron and Steel Association declining in the latter half of May.
The rebound in iron ore prices comes amid ongoing efforts by China and its western allies to secure critical mineral supplies, including rare earths, and reduce reliance on China’s dominance in the global commodities market.