Chinese iron ore futures and other steelmaking inputs rose on Tuesday, as hopes of an improvement in demand rose on optimism that COVID-19 lockdowns will ease further, although traders still kept their upbeat expectations in check.
The most-traded September iron ore on China’s Dalian Commodity Exchange ended the morning trade 0.3 percent higher at 824 yuan ($121.53) a ton, after hitting 849 yuan earlier in the day – the highest since May 6.
Shanghai, which has set out plans to end a painful COVID-19 lockdown that has bruised China’s economy, achieved on Tuesday a milestone of three consecutive days with no new cases outside quarantine zones.
“The rapid decline of new infections is…noteworthy – but given concerns about low levels of natural immunity and less effective vaccinations, the risk is that relaxation of restrictions could lead to another wave in China,” analysts at J.P.Morgan said in a note.
On the Singapore Exchange, iron ore’s most-active June contract dropped 1.4 percent to $128.05 a ton.
Robust blast furnace capacity utilization rates and daily offtakes from the country’s ports indicate that China’s iron ore demand has not collapsed despite the stringent lockdowns.
Shrinking iron ore port inventories and latest data showing declining shipments from top suppliers Australia and Brazil also provided support to prices, analysts said.
Iron ore stockpiles at Chinese ports stood at 141.75 million tons, as of May 13, the lowest since October, according to data from SteelHome consultancy.
The benchmark 62 percent-grade iron ore’s spot price – for materials bound for China – was $129.50 a ton on Monday, up from Friday’s $127, according to SteelHome data.
Dalian coking coal jumped 2.5 percent, while coke climbed 2.1 percent.
But construction steel rebar on the Shanghai Futures Exchange slipped 0.1 percent, while hot-rolled coil was virtually flat. Stainless steel shed 1.3 percent.
