Iron ore rose for a second consecutive week, underpinned by stimulus-related optimism and supportive fundamentals in top consumer China, although gains narrowed on Friday on fear of possible government supervision.
The key steelmaking ingredient also benefited from improved sentiment aftera key financial policy meeting earlier this week and following the latest fiscal stimulus in Asia’s largest economy.
The most-traded January iron ore on China’s Dalian Commodity Exchange (DCE) ended daytime trading 0.43% higher at 924.5 yuan ($126.38) a metric ton on Friday, ending the week with an increase of 2.7%, after touching an intra-day high of 936 yuan a ton earlier in the session, last seen in March.
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The benchmark December iron ore on the Singapore Exchange was little changed at $122.5 a ton, as of 0703GMT, a rise of 0.6%this week.
Chinese policymakers said during the twice-a-decade financial meeting on Oct.30-Oct. 31 that Beijing would strengthen efforts to reduce local debt risks and help with reasonable financing demands for all types of property enterprises.
This came after China last week approved a 1-trillion-yuan sovereign bond issue and passed a bill to allow local governments to frontload part of their 2024 bond quotas to support its economy.
Healthy fundamentals also supported iron ore, analysts said.
The average daily hot metal output among mills surveyed still held well above 2.4 million tons as of Friday, despite a weekly drop of 0.55%, data from consultancy Mysteel showed, indicating solid demand in the near term.
However, analysts at Everbright Futures highlighted downside risks from a possibly enhanced price monitoring from authorities and wider-scale production reduction among steelmakers.
Other steelmaking ingredients soared to a nearly one-month high, with coking coal DJMcv1 and coke DCJcv1 on the DCE up 4.31% and 3.55%, respectively.
Steel benchmarks on the Shanghai Futures Exchange also recorded gains on higher raw materials.
Rebar SRBcv1 climbed 1.41%, hot-rolled coil SHHCcv1 added 1.19%, wire rod SWRcv1 rose 0.78% and stainless steel SHSScv1 advanced 1.57%.
Source: Reuters (Reporting by Amy Lv and Dominique Patton in Beijing; Editing by Mrigank Dhaniwala and Sohini Goswami)