Iron ore price at almost 2-week high on better China data, stimulus hopes

Iron ore futures prices surged on Monday to their highest levels in nearly two weeks, buoyed by robust factory data from China, the world’s largest consumer, and expectations of additional stimulus measures in the near future.

The most-active September iron ore contract on China’s Dalian Commodity Exchange (DCE) closed daytime trading 2.5% higher at 840 yuan ($115.58) per metric ton, marking its peak since June 18.

Meanwhile, the benchmark August iron ore on the Singapore Exchange rose nearly 1.7% to $108.4 per ton, as of 0707 GMT, reaching its highest level since June 20.

The Caixin/S&P Global manufacturing purchasing managers’ index (PMI) climbed to 51.8 in June from 51.7 in the previous month, surpassing analysts’ expectations of 51.2 and marking the fastest growth since May 2021.

In contrast, China’s official manufacturing PMI remained unchanged at 49.5 in June, indicating contraction and aligning with forecasts.

Analysts from Jinrui Futures noted a diminished expectation of a significant decline in hot metal output following recent property stimulus measures in Beijing.

Beijing recently unveiled initiatives to lower home purchase costs through reductions in mortgage rates and minimum down payment requirements. Investors and traders are also anticipating potential additional stimulus during the upcoming third plenum scheduled from July 15 to July 18.

Elsewhere, coking coal and coke prices on the DCE rose by 2.8% and 3.3%, respectively, while steel benchmarks on the Shanghai Futures Exchange also recorded gains. Rebar increased by 0.7%, hot-rolled coil by 0.6%, wire rod by nearly 0.8%, and stainless steel by almost 0.9%.

Everbright Futures commented in a note that the potential for further declines in steel prices in the second half of the year is limited, given current relatively low valuations and operational losses at many mills.