Iron ore and steel futures in China closed higher on Thursday as Beijing aimed to complete local government special bonds issue by end-October, which is seen as a stimulus for infrastructure projects.
China has set the annual local government special bonds issue quota at 3.75 trillion yuan ($535.33 billion) this year. The finance ministry granted local governments the autonomy to use the proceeds, if they have a shortage of infrastructure projects.
The most active iron ore futures on the Dalian Commodity Exchange, for September delivery, rose for a third straight session, settling 1% higher at 840 yuan ($119.91) per tonne.
October delivery steel rebar, used as construction material, rose 0.5% to 3,767 yuan per tonne on the Shanghai Futures Exchange.
Hot-rolled coils closed up 1.1% at 3,819 yuan a tonne.
Weekly inventories of main steel products at mills and held by traders rose 1.3% to 22.3 million tonnes as of Thursday, data compiled by Mysteel consultancy showed.
This was the sixth week of gains after China entered the rainy season, which normally dents downstream demand, though inventories grew at a slower pace compared to the 1.7% rise in the previous week.
FUNDAMENTALS
Spot prices of iron ore with 62% iron content for delivery to China was unchanged at $109.5 per tonne on Wednesday from the previous session.
Shanghai stainless steel jumped 1.2% to 13,905 yuan a tonne.
Dalian coking coal fell 1.2% and coke inched 0.8% lower.
Rio Tinto believes China has had a sharp recovery from the COVID-19 economic slump, Chief Executive Jean-Sébastien Jacques said on Wednesday after the world’s top iron ore miner reported stronger than expected half-year earnings.
Miner Fortescue Metals Group on Thursday beat its full-year iron ore estimates with record shipments in the fourth quarter on the back of strong demand for the steel-making ingredient from China.
Source:Reuters
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