Iron ore extended its rally to a fourth straight session on Wednesday, with the Dalian benchmark scaling a five-week peak, as traders clung to hopes that recent policy actions in top steel producer China will spur demand for the raw material.
Steel futures and other steelmaking inputs in China also advanced as overall sentiment remained upbeat despite data showing that fell at their fastest pace since 2015 in October.
The most-traded January iron ore on China’s Dalian Commodity Exchange DCIOcv1ended daytime trade 2.2% higher at 734 yuan ($103.74) a tonne. It stretched gains during afternoon trade to hit 741 yuan, its highest since Oct. 11.
“Short-term (trading) is dominated by emotions,” Sinosteel Futures analysts said in a note.
Dalian iron ore has rallied nearly 20% this month after a rout in October, with gains accelerating following China’s announcement on Friday of the easing of some of its strict COVID-19 rules despite the current surge in infections.
News about a rescue package for ailing Chinese property developers added to the upbeat sentiment, even as October economic indicators pointed to the world’s second-largest economy slowing down due to the COVID-19 curbs and property sector downturn.
On the Singapore Exchange, benchmark December iron ore SZZFZ2 rose as much as 5.2% to $99.60 a tonne, its loftiest since Sept. 16.
Some market participants may be speculating that China could roll out more measures to support its economy, some analysts said.
Rebar on the Shanghai Futures Exchange SRBcv1 rose 2.1%, hot-rolled coil SHHCcv1 climbed 1.2%, wire rod SWRcv1 gained 1.6%, and stainless steel SHSScv1 advanced 2.4%.
Dalian coking coal DJMcv1 and Dalian coke DCJcv1 rose 0.9% and 1.7%, respectively.
The on-ground reality is not reassuring, however, as steel mills are reducing output amid weak demand and bracing for winter production curbs.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Savio D’Souza and Eileen Soreng)