By Enrico Dela Cruz
(Reuters) – Iron ore futures rebounded from two-week lows on Thursday, bolstered by rising steel output in top producer China and expectations of higher demand for the steelmaking ingredient ahead of the country’s Golden Week holiday.
Hopes of more stimulus to shore up China’s COVID-hit economy also added to the buoyant mood.
The most-traded January iron ore on China’s Dalian Commodity Exchange ended daytime trade 3.2% higher at 718 yuan ($101.47) a tonne.
On the Singapore Exchange, the benchmark October iron ore contract was up 2.8% at $98.35 a tonne, as of 0827 GMT.
China’s daily crude steel output recovered further in the middle ten days of September, with the volume touching a three-month high of 2.89 million tonnes on average, according to industry data provider Mysteel. Average daily crude steel output over the period was up 25,900 tonnes, or 0.9%, from the prior 10 days.
Mysteel attributed the rise in output in mid-September mainly to some blast furnace steelmakers resuming operations or steadily ramping up output after the previous production cutbacks.
Analysts said traders and steel mills were expected to replenish their iron ore stocks ahead of the Golden Week holiday beginning Oct. 1.
Steel prices also rebounded from recent declines as China Development Bank, the country’s largest policy lender by assets, said it will increase the number of infrastructure loans it gives to local governments.
Rebar and hot-rolled coil on the Shanghai Futures Exchange both climbed 3%. Stainless steel rose 0.4%.
Other steelmaking inputs also rose, with Dalian coking coal up 2.8% and coke climbing 1.8%.
However, doubts remain over the sustainability of any gains in the ferrous complex.
Iron ore prices may continue to fluctuate, “taking into account the pre-holiday replenishment, lower-than-expected (downstream steel) demand and adverse macro effects,” analysts at Huatai Futures said in a note.
(Reporting by Enrico Dela Cruz in Manila; Editing by Devika Syamnath)
