Iron ore futures prices rose on Monday, driven by better-than-expected factory data from China, the world’s top consumer, and hopes for further stimulus measures in the country later this month. The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) traded 1.2% higher at 829 yuan ($114.06) per metric ton as of 0304 GMT. Similarly, the benchmark August iron ore on the Singapore Exchange increased nearly 0.6% to $107.2 per ton.
The Caixin/S&P Global manufacturing purchasing managers’ index (PMI) rose to 51.8 in June, up from 51.7 in May. This marked the fastest growth rate since May 2021 and exceeded analysts’ forecasts of 51.2. However, the official manufacturing PMI remained unchanged from May at 49.5 in June, staying below the 50-mark that separates growth from contraction and aligning with a median forecast of 49.5 in a Reuters poll.
Analysts at Jinrui Futures noted that expectations of a significant drop in hot metal output diminished following recent property stimulus measures in Beijing. Last week, Beijing introduced measures to reduce home buying costs by cutting mortgage interest rates and lowering the minimum down payment ratio. Additionally, investors and traders are hopeful for more stimulus from the long-delayed third plenum, scheduled to take place from July 15 to July 18.
Other steelmaking ingredients on the DCE also saw gains, with coking coal and coke up 1.9% and 2.4%, respectively. Steel benchmarks on the Shanghai Futures Exchange posted marginal gains, with rebar ticking 0.3% higher, hot-rolled coil advancing 0.4%, wire rod edging up 0.1%, and stainless steel adding 0.5%.
Everbright Futures mentioned in a note that the potential for a further decline in steel prices in the second half of the year is limited, as valuations are already relatively low and many mills are operating at a loss.
Iron ore and steel futures are showing positive trends driven by strong factory data from China and the potential for more economic stimulus measures. These developments indicate a hopeful outlook for the market despite some ongoing challenges.
Alien Metals Ltd (LON:UFO) is a global minerals exploration and development company that will shortly make the transition to iron ore producer. The company was formed from Arian Silver in late 2018, retaining some of the companies more valuable Mexican projects before embarking on an acquisition led strategy, headed up by an excellent geological team and targeted entirely on Western Australia.
