Iron ore trades higher as demand rises

IRON ORE FUTURES POST ED strong gains for the week as traders began the year on the front foot of an increased demand in China, the world’s largest steel producer. The steel making ingredient’s most-active May contract on China’s Dalian Commodity Exchange traded 0.4 percent higher at 711.50 yuan ($111.56) a tonne, after touching 725.50 yuan earlier in the session, its highest since October 27. Dalian iron ore also recorded a weekly gain over five percent.

On the Singapore Exchange, iron ore’s most-traded contract expiring by end-February eased 0.4 percent at $126.85 a tonne but still ended the week on a bullish note after earlier hitting $128.25, its strongest since December 22, 2021.

Steel products were also firmer, with construction steel rebar on the Shanghai Futures Exchange gaining 0.6 percent, while hot-rolled coil climbed 1.5 percent, both on an upward trend for a fourth straight session.

Analysts at China’s state-owned enterprise, Sinosteel Futures, said the current rise in raw materials and the projected limited production during the Winter Olympics have boosted steel prices, considering that China is expected to curb mills’ operations in its steel production hubs to ensure clean air during the forthcoming Beijing 2022 Winter Olympics.

Dealers, however, observed that iron ore demand is yet to attain full recovery, noting that optimism on the easing of steel production controls after the Games have supported prices.

On the contrary, dealers noted that stainless steel prices lost as much as two percent to record a weekly decline amid low demand, despite an improvement in supply conditions.