Iron ore futures prices rose for a second straight session on Wednesday, aided by a wave of buying in China’s spot market and bets that the world’s second-largest economy will unveil more stimulus to spur its struggling property market.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) widened gains to end daytime trade 3.4% higher at 826 yuan ($113.67) a metric ton, its highest level since June 21.
The benchmark July iron ore on the Singapore Exchange climbed 3.8% to $107 a ton as of 0819 GMT.
Near-term demand for the key steelmaking ingredient remains solid, partly because iron ore is more cost-competitive than steel scrap, another steelmaking input.
Iron ore transaction volumes at major ports jumped 9.3% from Monday to around 1.09 million tons on Tuesday, data from consultancy Mysteel showed.
China’s capital city Beijing on Wednesday lowered the minimum down payment ratio for first home buyers to no less than 20%, according to a local government statement.
“Some investors are trading on expectations of possible stimulus in July,” said Cheng Peng, a Beijing-based analyst at Sinosteel Futures.
Investors and traders are waiting for a key meeting, known as the third plenum, to be held in July, which will focus on deepening reforms and promoting China’s modernization.
Some traders have recently closed short positions to cash in profits, a sign that they do not believe there is much leeway for further price falls, said a Shanghai-based analyst.
Daily crude steel output among member steelmakers dropped 2.8% to about 2.19 million tons between June 11 and June 20 compared with the previous 10-day period, data from the China Iron and Steel Association showed.
Some electric-arc-furnace-based steelmakers scaled down production after losses widened, partly contributing to lower crude steel output, analysts said.
($1 = 7.2665 yuan)
(Reporting by Amy Lv and Mei Mei Chu; Editing by Subhranshu Sahu, Edwina Gibbs and Shailesh Kuber)
