Dalian iron ore futures jumped 7% on Thursday on expectations for a rebound in demand as top steel producer China returned from a week-long Lunar New Year holiday, with signs of an accelerating global economic recovery adding to the optimism.
May iron ore on China's Dalian Commodity Exchange DCIOcv1 was up 7.1% at 1,131.50 yuan ($175.22) a tonne by 0700 GMT, after advancing to 1,134.50 yuan, its strongest level since Dec. 22.
On the Singapore Exchange, the steelmaking ingredient's March contract gained 1.5% to $169.40 a tonne SZZFH1 .
Chinese steel mills are expected to ramp up production to rebuild stocks as many construction sites remained open throughout the holiday, and to meet future demand.
“Sentiment has also been supported by positive outlooks from the major exporters,” said ANZ senior commodity strategist Daniel Hynes.
The global iron ore market is likely to remain robust for some time, given supply concerns and China's stronger-than-usual demand, Fortescue Metals Group FMG.AX Chief Executive Elizabeth Gaines said. Tuesday, BHP Group BHP.AX BHPB.L said it expected a continuation of strong Chinese demand in 2021, and a recovery in global crude steel production. iron ore has risen nearly 14% this year, with tight supply adding support as Brazilian mining giant Vale SA VALE3.SA struggles to boost output due to operational constraints.
“We would not be surprised if iron ore briefly trades above its historic high of $190/t achieved in February 2011, but we do not see it as likely that prices would stay there for a sustained period of time,” Citi analysts said in a Feb. 5 note.
Spot iron ore in China traded at $161 a tonne before the holiday, SteelHome consultancy data showed. SH-CCN-IRNOR62
Dalian coking coal DJMcv1 rose 4.1% and coke advanced 6.1%.
Rebar on the Shanghai Futures Exchange SRBcv1 gained 3.3%, hot-rolled coil SHHCcv1 jumped 2.5% and stainless steel climbed 2.3%.
Source:Reuters
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