BEIJING- Chinese iron ore futures jumped more than 5 percent on Wednesday, after falling for three straight sessions, as hopes of demand recovery at mills rose, even as COVID-19-led lockdowns in the country disrupted economic activity.
The most-active iron ore futures on the Dalian Commodity Exchange, for September delivery, surged 6.6 percent to 831 ($123.72) yuan a ton – the biggest percentage gain since March 7. The contract closed up 5.3 percent at 821 yuan per ton.
On the Singapore exchange, the most-traded June iron ore contract gained 4.3 percent to $131.85 per ton.
“The (pandemic’s) impact on areas such as Tangshan is easing, and raw materials’ transportation has resumed,” analysts with Haitong Futures said in a note, adding that daily molten iron output recovered from previous weeks.
However, profits at mills are relatively low and steel production controls may still weigh on mills’ utilization rates, said the note.
China’s producer price index rose 8 percent year-on-year in April, the slowest pace in a year, data from the National Bureau of Statistics showed, giving policymakers headroom for more stimulus to shore up a flagging economy.
Coking coal prices on the Dalian bourse ended up 2 percent to 2,663 yuan a ton and coke futures increased 2.3 percent to 3,418 yuan per ton.
The jump in raw material prices also drove steel products on the Shanghai Futures Exchange.
Construction material steel rebar for October delivery advanced 2 percent to 4,681 yuan a ton. Hot rolled coils, used in the manufacturing sector, added 1.9 percent to 4,775 yuan per ton. – Reuters
