Dalian iron ore futures ended a three-session decline on Friday, lifted by new stimulus measures from China, the world’s leading consumer. The most-traded September iron ore contract on the Dalian Commodity Exchange (DCE) rose 1.5% to 779 yuan ($107.45) per metric ton, although it registered a 2.75% drop for the week. Similarly, the benchmark August iron ore contract on the Singapore Exchange increased by 1.94% to $101.85 per ton, despite a 4.41% decline for the week, marking its steepest weekly fall since June 7.
China’s industrial metals sector received a boost from a 300 billion yuan ($41.40 billion) bond fund allocation aimed at economic recovery. This stimulus includes subsidies for upgrading steel-intensive consumer and industrial goods, according to Cameron Law, a commodities analyst at Navigate Commodities. Despite this positive impact on manufacturing activity, Law cautioned that the stimulus is insufficient to counteract the ongoing decline in the construction sector or to change the Chinese consumer’s outlook on property investments.
ANZ analysts noted a persistent weakness in the steel market due to a downturn in construction activity, as reflected in rising steel inventories in China. Data from consultancy Mysteel showed that stocks of finished steel products at traders’ warehouses in 132 Chinese cities fell by 0.8% week-on-week during July 19-25, reaching a one-month low of 21 million tons, but they were still 11.9% higher year-on-year.
Market participants are now anticipating the upcoming Politburo meeting, where new economic growth measures may be announced, as highlighted by ANZ analysts. Other steelmaking ingredients also saw price increases on the DCE, with coking coal and coke up by 0.57% and 0.43%, respectively. Most steel benchmarks on the Shanghai Futures Exchange recorded gains, with rebar and hot-rolled coil each rising about 0.65%, wire rod increasing by 0.44%, while stainless steel slightly declined by 0.22%.
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