Iron ore extends gains on China stimulus hopes
The most-traded September iron ore contract on China's Dalian Commodity Exchange (DCE) traded 1.74% higher at 817 yuan ($113.93) a metric ton, as of 0313 GMT.
The benchmark August iron ore on the Singapore Exchange was 0.89% higher at $104.4 a ton. 'Iron ore futures extended recent gains amid prospects of additional stimulus measures, with Beijing's announcement of the $170 billion hydropower project promising to deliver a positive economic boost for steel,' ANZ analysts said in a note.
The move has also sparked optimism that the government may be reverting to traditional fiscal stimulus strategies to bolster economic growth, ANZ added, with positive sentiment further supported by ongoing efforts to reduce excessive competition and overcapacity in the steel industry.
Hot metal output, an indicator of iron ore demand, remained high according to analysts. On the supply front, shipment volumes from top producers remained mixed, with Australia volumes continuing to decline while Brazil's volumes rebounded, said broker Everbright Futures.
Meanwhile, Chinese steelmakers are bypassing tariffs by exporting semi-finished steel billets, which are not subject to the same trade restrictions as finished steel products in many countries. This strategy has contributed to the sharp rise in exports from the world's largest steel producer.
Despite robust exports, researchers noted that in order to reach its decarbonisation target for the year, China must reduce its steel output from the coal-powered blast furnace process.
Other steelmaking ingredients on the DCE gained ground, with coking coal and coke surging 5.97% and 2.96%, respectively. Steel benchmarks on the Shanghai Futures Exchange all increased. Rebar rose 0.75%, hot-rolled coil climbed 0.98%, wire rod gained 1.23% and stainless steel edged up 0.08%.
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