Iron ore futures rise on demand optimism

Iron ore futures continued to climb on Tuesday, supported by strong near-term demand and optimism around potential stimulus measures.

Market sentiment was buoyed by news that China has begun construction on what will become the world’s largest hydropower dam, a USD 170 bln project expected to significantly boost steel demand.

According to analysts at ANZ, the Chinese government may be returning to traditional fiscal stimulus strategies to support economic growth. In addition, Beijing’s efforts to curb aggressive price competition are seen as a positive for the steel industry, helping to maintain healthy margins, particularly for blast furnace-based producers, thereby supporting iron ore consumption through sustained production levels.

On the Dalian Commodity Exchange, the most-traded September iron ore contract rose 2.49pct to 823 yuan (USD 114.6) per ton. Coking coal and coke futures surged nearly 8pct to 1,697.5 yuan (USD 237) and 1,048.5 yuan (USD 146) per ton, respectively, amid concerns over potential government inspections in key coal-producing regions that could disrupt supply.

Steel futures also strengthened on the Shanghai Futures Exchange. Rebar rose 3.12pct to 3,307 yuan (USD 461) per ton, HRC gained 2.84pct to 3,477 yuan (USD 485), and wire rod jumped 4pct to 3,638 yuan (USD 507). Stainless steel edged up 0.47pct to 12,930 yuan (USD 1,802) per ton.

1 USD / 7.17 yuan