Dalian iron ore climbed to its highest in two weeks on Tuesday, supported by persistent hopes of China easing its COVID-19 rules and technical buying, despite worries about a surge in new coronavirus cases in some Chinese cities and weak steel demand.
The most-traded January iron ore on China’s Dalian Commodity Exchange ended daytime trade 2.6% higher at 680 yuan ($93.80) a tonne, after hitting its highest since Oct. 24 at 683 yuan.
The steelmaking ingredient’s Dalian contracts for February and beyond posted bigger gains amid expectations that any major shift from China’s strict COVID containment policy could be undertaken in 2023.
On the Singapore Exchange, benchmark December iron ore was up 2.1% at $87.95 a tonne by 0716 GMT, rising for a sixth session.
Iron ore’s epic rebound after a rout in October continued despite China reaffirming its adherence to a “dynamic-clearing” approach to COVID-19 cases as soon as they emerge, dashing hopes of a quick reopening of the economy.
New coronavirus cases surged in Guangzhou and other Chinese cities, with the global manufacturing hub becoming China’s latest COVID-19 epicentre.
“We believe that relaxation from existing measures is more likely after 2022,” ING economists said, following a Wall Street Journal report saying Chinese leaders are considering steps toward reopening, but are proceeding slowly and have set no timeline.
Iron ore’s rally appeared lacking support from fundamentals, however, as COVID-19 restrictions and the upcoming winter steel output curbs are likely to dampen demand.
But technical signals were positive as Dalian iron ore breached psychological resistance at 673 yuan, according to commodity broker Marex.
Other Dalian steelmaking inputs also advanced, with coking coal and coke up 1.4% and 2.2%, respectively.
On the Shanghai Futures Exchange, rebar gained 0.6%, hot-rolled coil added 0.3%, wire rod rose 0.6%, while stainless steel dipped 1.3%.
Source: Reuters
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