Iron-ore hits two-month high as China policy hopes buoy demand
Iron-ore climbed to a two-month high, with traders encouraged by China’s pledge to reduce excess competition and outdated capacity, despite the steel market’s weakening demand outlook.
The bulk commodity rose as much as 1.3% on Thursday before paring gains. Prices have moved above $100 a ton this week for the first time since May, bolstered by Beijing’s signals that it’s determined to eradicate industrial overcapacity in a bid to improve mills’ margins. Expectations for fresh property-sector stimulus measures have improved the consumption outlook.
Those positive signs have been balanced by data that showed China’s steel output saw its biggest decline in 10 months in June, falling 9.2% from a year earlier to 83.2-million tons. That left first-half production at its weakest since 2020.
“Iron ore prices have responded positively to supply-side reform news alongside demand hopes in China’s property sector,” Commonwealth Bank of Australia analyst Vivek Dhar said in a note. Still, he added that questions remained over whether the nation’s steel output decline will be maintained for the rest of the year, and how production policies will interact with potential stimulus.
Iron ore was up 0.5% to $100.40 a ton at 10:33 a.m. in Singapore. Futures in Dalian rose 0.8%, while steel contracts in Shanghai also gained.
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