Dalian iron ore futures extended gains for a second session on Thursday as market sentiment improved following the removal of production curbs in key steel-making cities and on better-than-expected manufacturing data from China.
Handan and Tangshan, China’s top steel production hubs, lifted pollution restrictions on Wednesday after air quality improved.
The most-traded May iron ore futures contract on the Dalian Commodity Exchange (DCE) ended daytime trade 1.56% higher at 912.5 yuan ($132.19)a tonne, the highest since Feb. 23. The contract gained nearly 2.5% in the previous session.
“The removal of production restrictions has partly contributed to the rising [iron ore] futures prices this morning. In addition, steel mills’ iron ore inventories hover at a relatively low level, lending support to prices,” analysts from Haitong Futures said.
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On the Singapore Exchange, the benchmark April iron ore inched down 0.03% to $126.05 a tonne, as of 0705 GMT.
Other steel-making ingredients coke and coking coal exhibited divergent trends. Coke DCJcv1 moved 0.63% higher, while coking coal nudged down 0.44%.
Expectations of higher demand for steel products in March and April also lifted the steel-making raw materials.
“Home sales by major developers rose in February for the first time in 20 months, aided by positive signs of demand in the steel sector,” analysts from ANZ bank said in a note.
Transactions of construction steel products across the country totalled 204,025 tonnes on March 1, posting a week-on-week rise of 33.06%, data from consultancy Mysteel showed.
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Rebar on the Shanghai Futures Exchange rose 0.64%, hot-rolled coil climbed 0.77% and wire rod gained 0.1%.
“The steel market has been destocking for the moment, indicating improved demand from downstream sectors,” said a Shanghai-based steel trader, who requested anonymity as he is not authorised to speak to media.
Stainless steel continued the downtrend with a fall of 0.71%.
Source: Reuters (Reporting by Amy Lv and Dominique Patton in Beijing; Editing by Sherry Jacob-Phillips and Subhranshu Sahu)