Benchmark Chinese iron ore futures rose in early trade on Thursday to their highest in five weeks, extending gains in anticipation of some restocking demand for the steelmaking raw material ahead of holidays in China.
Declining iron ore shipments into China and signs of easing trade frictions between Washington and Beijing added fuel to the rally.
The most-traded iron ore on the Dalian Commodity Exchange, for January 2020 delivery, climbed as much as 2.1 percent to 669 yuan ($94.22) a ton, its highest since Aug. 8, and was on track for its second consecutive gain on a weekly basis.
Financial markets in China are closed on Friday for the nation’s Mid-Autumn Festival.
Amid declining iron ore seaborne arrivals, purchases of the material may pick up due to some restocking demand of steel mills ahead of the country’s National Day celebrations in early October, said Richard Lu, senior analyst at metals consultancy CRU in Beijing.
He also said sentiment was buoyed by the latest news regarding the US-China trade dispute, with US President Donald Trump on Wednesday welcoming China’s decision to exempt some US anti-cancer drugs and other goods from its tariffs.
Trump at the same time announced a short delay to scheduled tariff hikes on billions worth of Chinese goods “as a gesture of good will.”
“It will definitely strengthen market confidence and reduce the worries,” Lu said.
The bruising trade war has raised concerns about future demand for steel not only in China, the world’s top producer and consumer of the construction and manufacturing material. China is also among the biggest exporters of steel products. – Reuters