Benchmark Dalian and Singapore iron ore futures jumped to fresh contract highs on Thursday, driven by concerns about supply of the steelmaking raw material from Australia and optimism around demand as steel prices picked up in China.
Weekly iron ore shipments to China from top supplier Australia fell to 12 million tons last week, the lowest in more than two months, based on ports data available on Refinitiv Eikon.
January iron ore, the benchmark contract on the Dalian Commodity Exchange, rose as much as 2.6 percent to 877.50 yuan ($133.68) a ton, extending gains into a fourth straight session.
Iron ore’s most-active December contract on the Singapore Exchange climbed 0.9 percent to $124.10 a ton, also rising for a fourth day.
Resilient iron ore demand from China, the world’s top steel producer, and “signs that the rise in exports from Australia was easing” buoyed market sentiment, said Daniel Hynes, senior commodity strategist at ANZ.
Spot iron ore prices also surpassed $120 a ton, with the benchmark 62 percent material touching $126.50 a ton on Wednesday, according to SteelHome consultancy, the highest since Sept. 15.
“Strong data from (China’s) property sector continues to bolster expectations that margins at steel mills will remain elevated and therefore supportive for iron ore demand,” said Wenyu Yao, senior commodities strategist at ING.
Real estate investment in China grew 12.7 percent in October from a year ago, the fastest pace since July 2018, while property sales by floor area rose a solid 15.3 percent, the highest in over three years. New construction starts expanded 3.5 percent.
Steel futures also scaled contract highs, with rebar on the Shanghai Futures Exchange climbing 1.3 percent and hot-rolled coil jumping 1.1 percent. Stainless steel rose 1.5 percent.
Dalian coking coal dipped 0.5 percent and coke slipped 0.1 percent.