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Benchmark iron ore futures rose on Thursday as top steel producer China reiterated its resolve to support economic growth by stimulating consumer spending, though gains were capped while traders continued assessing demand prospects.
The most-traded May iron ore on China’s Dalian Commodity Exchange ended daytime trade 1.8% higher at 880 yuan ($128.43) a tonne, after earlier hitting its highest since Jan. 30 at 883 yuan.
On the Singapore Exchange, the steelmaking ingredient’s benchmark March contract was up 1.3% at $124.90 a tonne, as of 0827 GMT, rising for a third day.
Chinese authorities said on Thursday they will craft policies aimed at stimulating spending on housing and unlocking consumer savings that have built up during the pandemic.
Also lending support to ferrous futures prices, China’s rose in January for the first time in a year, as the end of the zero-COVID regime, favourable property policies and market expectations for more stimulus measures boosted demand.
On the Dalian exchange, coking coal DJMcv1 rose 2.2% and coke DCJcv1 climbed 2.4%.
Steel benchmarks on the Shanghai Futures Exchange were also firmer, with rebar SRBcv1 gaining 2.1%, hot-rolled coil SHHCcv1 rising 1.6%, and wire rod SWRcv1 advancing 0.3%. Stainless steel SHSScv1 slipped 0.3%.
Although firmer, iron ore remained range-bound this week as the expected rebound in Chinese demand for steel has been slow, while analysts maintained a subdued outlook for the Chinese property market.
A sluggish domestic steel demand and elevated costs of steelmaking ingredients have squeezed mills’ profitability.
“Overall iron ore prices have been suppressed by weak profits and a weak recovery in end demand,” Sinosteel Futures analysts said in a note, adding that trading was largely “still in the demand verification period”.
Adding to the cautiousness, iron ore portside inventory in China hit a five-month high last week, SteelHome consultancy data showed.