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Dalian and Singapore iron ore futures extendedgains on Monday to their highest in three weeks ontraders’ relief thatsteel mills in China’s major steelmaking province were yet to implement production cuts and on the latest monetary stimulus rolloutby the government.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trading 0.91% higher at 777 yuan ($106.35) a metric ton, the highest since July 26.
The benchmark September iron ore on the Singapore Exchange was up 0.56% at $107.45 a metric ton, as of 0717 GMT, the highest since July 31.
China cut its one-year benchmark lending rate on Monday, as expected, but surprised markets by keeping the five-year rate, which influences the pricing of mortgages, unchanged.
In a Reuters poll of 35 market watchers, all participants predicted cuts to both rates.
The central bank’s decision came after China said it would coordinate financial support to resolve local government debt problems, as part of efforts to shore up an increasingly shaky economic recovery and reassure worried investors.
Iron ore consumption remains resilient amid the high levels of hot metal production, although steelmakers exercised caution on purchasing volumes, analysts at Huatai Futures said in a note.
“The market was buoyed by reports that Chinese steelmakers were not cutting production as much as was earlier feared,” analysts at ANZ said in a note.
Other steelmaking ingredients such as coking coal DJMcv1 and coke DCJcv1 on the DCE climbed 2.6% and 2.38%,respectively.
Steel benchmarks on the Shanghai Futures Exchange were broadly down. Rebar SRBcv1 lost 1.4%,hot-rolled coil SHHCcv1 shed 0.79%and wire rod SWRcv1 fell 1.64%.
“Though steel fundamentals saw some improvement in the previous week, it’s still under pressure amid the overall weak macro economic environment together with the seasonally slow demand,” analysts at Sinosteel Futures said in a note.
Stainless steel SHSScv1 added 0.54%.