Iron ore price hits three-month high on China demand

Iron ore futures soared to a three-month high on Wednesday as investors anticipated better demand following China’s robust property support measures, despite ample stocks in the world’s top consumer.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) rose by an impressive 2.5% to 919 yuan ($126.95) per metric ton by 0504 GMT, marking its highest level since February 20. The contract has experienced gains for five consecutive sessions, reflecting sustained investor confidence.

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Similarly, the benchmark June iron ore on the Singapore Exchange increased by 0.8% to $121.8 per ton.

China’s recent announcement of "historic" measures to stabilize its crisis-hit property sector has significantly bolstered market sentiment. The central bank’s initiative to inject 1 trillion yuan ($138 billion) in extra funding and ease mortgage rules is among the key steps taken to support the sector.

The property sector, a major driver of steel consumption, has fueled optimism among investors regarding the demand for steelmaking ingredients. Despite the rally being driven mainly by positive macroeconomic sentiment, fundamentals still lag with substantial supply available in the spot market, according to an iron ore trader.

Iron ore inventory at major Chinese ports, as assessed by information provider Mysteel, stood at 147.4 million tons, up 6% since the beginning of March.

Other steelmaking ingredients on the DCE also climbed, with coking coal advancing 4.6% and coke rising 4.4%.

Steel benchmarks on the Shanghai Futures Exchange were mostly positive. Rebar increased by 1.5%, hot-rolled coil added 1.1%, and wire rod went up by 2.2%, while stainless steel slightly eased by 0.1%.

($1 = 7.2391 yuan)

(By Siyi Liu and Colleen Howe; Editing by Rashmi Aich and Sohini Goswami)