Benchmark Dalian and Singapore iron ore futures rose for a third straight session on Monday, buoyed by renewed optimism around demand for the steel-making ingredient as signs emerged that top steel producer China is back to ramping up output this month.
Iron ore’s most-active January contract on the Singapore Exchange rose as much as 6.7 percent to $127.95 a ton, its highest since Oct. 12.
The most-traded iron ore for May delivery on China’s Dalian Commodity Exchange ended the morning session 0.7 percent higher at 687.50 yuan ($107.80) a ton.
The futures rally mirrored the upbeat mood in the physical market, with the benchmark 62 percent-grade iron ore trading at $120 a ton on Friday, its highest since Oct. 27, based on SteelHome consultancy data.
“Analysts expect a rebound in steel output as Beijing’s yearly targets have been met, prompting mills to resume production,” resources sector advisor and broker SP Angel said in Dec. 17 note.
With China churning out 946.36 million ton crude steel during January-November, down 2.6 percent from the year-ago period, there is scope for mills to ramp up production as the target is to limit this year’s output to no more than last year’s volume of 1.05 billion tons in order to control emissions.
Crude steel output in the first 10 days of December climbed 12 percent from a month earlier, ANZ analysts said, citing data from the China Iron & Steel Association.
Still, iron ore’s rally was being tempered by China’s rising imported iron ore stockpiles, which hit 157.50 million tons last week, steadily rising for the 11th consecutive week to their highest level since June 2018, according to SteelHome data.
Construction steel rebar on the Shanghai Futures Exchange advanced 0.6 percent, while hot-rolled coil gained 0.4 percent. Stainless steel added 0.3 percent.
Dalian coking coal climbed 2.6 percent but coke was flat.
