BEIJING (Reuters) – Prices of iron ore futures rose on Monday as near-term demand remained firm and the latest rate cut in top consumer China lifted sentiment, but gains were capped by a lingering caution on exactly how much boost the steel market will have.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) traded 1.52% higher at 770 yuan ($108.40) a metric ton, as of 0207 GMT.
The benchmark November iron ore <SZZFX4> on the Singapore Exchange climbed 0.95% to $102.65 a ton.
Near-term demand for the key steelmaking raw material held firm thanks to improved steel margins, said analysts.
The daily average hot metal output among steelmakers surveyed gained for a seventh straight week, rising 0.5% on the week to 2.34 million tons as of Oct. 18, the highest since early August, while profitability climbed for the eighth consecutive week to 74.46%, data from consultancy Mysteel showed.
Meanwhile, China cut benchmark lending rates at the monthly fixing on Monday, boosting the market, after trimming other policy rates last month as part of a package of stimulus measures to revive the economy.
Price gains, however, were capped by lingering doubts on any quick boost in iron ore and steel demand from the raft of stimulus measures in the world’s second-largest economy since late September.
“While the focus on reducing inventory is likely to speed up the recovery, it will have little impact on steel and iron demand in the short term,” analysts at ANZ said in a note.
Other steelmaking ingredients on the DCE gained ground, with coking coal and coke adding 0.56% and 0.53%, respectively.
Steel benchmarks on the Shanghai Futures Exchange advanced. Rebar rose 1.08%, hot-rolled coil added 1.06%, wire rod climbed 1.1% and stainless steel edged up 0.65%.
($1 = 7.1035 Chinese yuan)
(Reporting by Amy Lv and Mei Mei Chu; Editing by Sumana Nandy)
