Iron ore futures extended gains into a fourth straight session on Monday, buoyed by optimism over Chinese propertysector-related stimulus and supportive fundamentals, despite a weakening steel market and fears of tightened government supervision.
The most-traded January iron ore on China’s Dalian Commodity Exchange (DCE) >ended daytime trading 1.68% higher at 966.5 yuan ($132.46) a metric ton, a fresh peak since August 2021.
The benchmark December iron ore SZZFZ3 on the Singapore Exchange reversed course and was 0.98% higher at $128.05 a ton – the highest since March 20 -as of 0724 GMT.
The benchmark fell earlier in the session on hawkish comments from the U.S. Federal Reserve Chair Jerome Powell.
China will firmly implement policy pledges of the property market to meet the housing demands of the people and promote high-quality development of the sector, state media reported on Saturday, citing Ni Hong, minister of Housing and Urban-Rural Development.
“Any improvement would require a substantial restocking of raw materials, with weak margins pushing steel mills to work down the inventory,” analysts at ANZ bank said in a note.
However, analysts remained cautious about the growingrisks of possible tightening of government supervision following a price rally.
China’sstate planner closely monitors the iron ore market and often warns it will step up its supervision in response to rapid price rises. Such statements typically cool sentiment in the market.
Other steelmaking ingredients on the DCE also recorded gains, with coking coal DJMcv1 and coke DCJcv1 up 1.21% and 0.41%, respectively.
Steel benchmarks on the Shanghai Futures Exchange broadly edged down. Rebar SRBcv1 was little moved, hot-rolled coil SHHCcv1 retreated 0.35%, wire rod SWRcv1 shed 0.25% and stainless steel SHSScv1 fell 2.1%.
“Steel demand in northern regions seasonally weakened amid sharp temperature drops across many regions in China as it entered into winter,” analysts at Galaxy Futures said in a note.
Traders, meanwhile, awaited a batch of economic data as well as output for some key commodities, due onWednesday, for further direction.
