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Benchmark iron ore futures held ground on Wednesday as China’s activity data in January and February pointed to an economic rebound, albeit gradual, for the world’s top steel producer.
China’s central bank ramped up liquidity injections when rolling over maturing medium-term policy loans for a fourth month in a row, which also lent support to ferrous futures.
The People’s Bank of China’s move followed data last week showing unexpectedly strong credit growth for February, as Beijing looks to support economic recovery.
The most-traded May iron ore on China’s Dalian Commodity Exchange DCIOcv1 ended daytime trade steady at 926.50 yuan ($134.48) a tonne, near the contract’s record high of 936 yuan.
On the Singapore Exchange, the steelmaking ingredient’s benchmark April contract SZZFK3 was up 0.4% at $132.20 a tonne, as of 0707 GMT.
China’s economic activity picked up in the first two months of 2023 as consumption and infrastructure investment drove recovery from pandemic disruption, despite challenges of weak global demand and a persistent downturn in the property sector.
China’s crude steel output for the two-month period increased 5.6% as mills ramped up production in anticipation of a further boost in demand, with domestic construction activity expected to pick up in the second quarter.
“The overall consumption of steel products has shown an unexpected growth, which has greatly improved market confidence,” Huatai Futures analysts said in a note.
Rebar on the Shanghai Futures Exchange SRBcv1 shed a modest 0.9%, after scaling a nine-month peak in the previous session, while hot-rolled coil SHHCcv1 dropped 0.6%. Wire rod SWRcv1 fell 1.5%, but stainless steel SHSScv1 added 0.4%.
On the Dalian exchange, coking coal DJMcv1 and coke DCJcv1 slumped 3.9% and 2.6%, respectively.
China’s demand for Australian coking coal remains lacklustre even after Beijing removed import restrictions, as supplies from local mines, Mongolia and Russia are cheaper, traders say.