Iron ore futures jumped on Wednesday as China returned from the May Day holiday break, with demand for the steelmaking feedstock expected to pick up in summer as construction activities rebound and blast furnaces resume production.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) was 2.33 percent higher at 812 yuan (HK$931.54) per metric ton, as of 0221 GMT.
The benchmark June iron ore on the Singapore Exchange was 1.19 percent higher at US$109.8 (HK$856.44) per ton.
Steel demand is expected to pick up after the five-day break in China, with blast furnaces likely to resume operations after maintenance during the holidays, Chinese broker Galaxy Futures said in a note on WeChat.
Iron ore prices are also supported by increased volatility in coking coal and coke prices, driven by higher energy demand as summer approaches, Galaxy Futures said, adding that high ore imports and overall weaker steel demand however weighed on price gains.
From April 27 to May 3, iron ore arrivals at 47 Chinese ports increased by 2.15 million tons week-on-week, according to data from consultancy Mysteel.
Although there have been marginal improvements in steel demand over the past two months, it is still on the weaker side as consumption of steel products fell week-on-week, said Liu Huifeng, chief researcher of ferrous metals futures at Donghai Futures.
Although steel prices have rebounded, surging energy and raw material prices are pressuring already declining steel mill margins, he said.
Other steelmaking ingredients on the DCE climbed, with coking coal and coke up 2.57 percent and 2.04 percent, respectively.
Steel benchmarks on the Shanghai Futures Exchange rose. Rebar gained 1.25 percent, hot-rolled coil firmed 1.9 percent, wire rod spiked 5.26 percent and stainless steel increased 1.49 percent.
Reuters
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