The iron ore price surged more than 2% on Friday, posting a third straight weekly gain amid hopes for strong demand, fuelled by China’s fresh stimulus measures.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $137.36 a tonne during morning trading, up 2.3% compared to Thursday’s closing.
Benchmark iron ore futures on the Dalian Commodity Exchange, for May delivery, jumped as much as 3% to 762 yuan ($120.12) per tonne, the highest since October 13. They ended up 2.2% to 756 yuan a tonne, sending the weekly gain to 4.6%.
“The recent recovery is premised on a market view that may well end up shaping commodity prices for 2022, namely that China is once again going to open up the stimulus taps to boost a flagging economic recovery,” wrote Reuters columnist Clyde Russell.
“If this is the case, then iron ore and metals stand to be the major beneficiaries, as well as coking coal used to make steel.”
Capacity utilisation rates of blast furnaces at 247 steel mills across the country continue to recover and stood at 81.08% this week, up from 79.89% a week earlier, data from consultancy Mysteel showed.
“There is strong anticipation that steel production will resume in the medium term,” SinoSteel Futures analysts said, but warned that short-term demand for steelmaking ingredients is pressured due to the Winter Olympics and pandemic-related restrictions.
Huatai Futures noted that China’s recent monetary policy came in line with central government’s requirements, and more policies are expected to shore up the world’s second-largest economy.
(With files from Reuters)