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Iron ore futures edged higher on Monday, supported by hopes of further recovery in demand in top consumer China and Beijing’s pledge to support its struggling property market.
Gains, however, were limited as doubts lingered whether a recovery in steel demand would meet expectations, and as portside stocks still remained high.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) DCIOcv1 ended daytime trade 0.3% higher at 842 yuan ($116.91) a metric ton.
The benchmark April iron ore SZZFJ4 on the Singapore Exchange was flat at $108.1 a ton, as of 0747 GMT.
China will further optimise property policy and effectively motivate potential demands, state media cited Premier Li Qiang as saying at a cabinet meeting on Friday, in the latest official call to prop up the ailing property sector.
“There is expectation of rising ore demand amid improved steel margins. It’s key to closely monitor how downstream steel demand actually recovers in coming weeks as well as how steel prices move,” analysts at Sinosteel Futures said in a note.
Steel and iron ore demand is expected to find some support from “non-property sectors”, analysts at ANZ said in a note.
“Infrastructure investment should benefit from government efforts to build out the country’s renewable energy sector,” they added.
Other steelmaking ingredients on the DCE lost ground, with coking coal DJMcv1 and coke DCJcv1 down 0.51% and 1.24%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were broadly lower. Rebar SRBcv1 dropped 0.75%, hot-rolled coil SHHCcv1 ticked 0.42% lower, wire rod SWRcv1 fell 0.28% and stainless steel SHSScv1 shed 1.5%.
“Stocks of rebar will likely pile up further when more steel mills resume production and the operating rate among construction sites has yet to recover to a year-ago level,” analysts at Citic Futures said in a note.