MANILA: Iron ore futures rose on Friday, buoyed by firmer steel prices and following a report that anti-smog measures have been lifted in China’s top steelmaking city of Tangshan, which spurred hopes of a pickup in demand for the raw material.
The Dalian Commodity Exchange’s most-traded iron ore contract, with May 2020 expiry, ended up 1.2% at 642.50 yuan ($91.83) a tonne, recouping earlier losses this week.
On the Singapore Exchange, the front-month January contract was up 0.2% at $89.75 a tonne in afternoon trade.
Metals data provider Shanghai Metals Market reported on Thursday that Tangshan had lifted a second-level pollution alert issued on Monday. Such anti-smog alerts require steel mills to reduce their operations, curbing demand for steelmaking materials.
The volatile week saw market activity winding down as the year-end holiday season kept many participants at bay. Little action is also expected next week and in the first few days of 2020, said a Shanghai-based trader.
While mills’ restocking activities may resume ahead of the Spring Festival, or China’s week-long Lunar New Year holiday in late January, iron ore prices may just move in narrow ranges. “We won’t probably see a real recovery in iron ore demand until the second half of February,” the trader said.
Prices for spot cargoes of benchmark iron ore with 62% iron content for delivery to China declined by $1 to $91.50 a tonne on Thursday, data from SteelHome consultancy showed. After hitting a peak of $126.50 on July 3 this year amid concerns over tight supply, iron ore prices have pulled back as shipments into China, the world’s top steel producer, picked up starting August.
Australia’s Westpac Banking Corp has forecast iron ore prices to hold around current levels up to mid-2020, but it expects a further rise in supply, along with slower demand, to push prices down to $65 later in the year.
The Shanghai Futures Exchange’s most-traded construction steel rebar rose 1.1%, while hot-rolled steel coil , used in cars and home appliances, climbed 0.9%.
Steel prices rebounded as prospects of demand brightened somewhat following a report on Thursday that said China was planning major infrastructure investments in 2020.
Friday’s data showing industrial profits in China grew at the fastest pace in eight months in November added to the upbeat sentiment.
Dalian coking coal edged up 0.3%, while coke jumped 0.5%.—Reuters