Iron ore futures edged up on Friday, aided by stimulus expansion from top consumer China, but ended the week lower on seasonally softening demand for the key steelmaking ingredient.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 0.4% higher at 753.5 yuan ($102.76) a metric ton but logged 1.95% decline for the week.
The benchmark February iron ore on the Singapore Exchange traded steady, ticking down 0.01% at $97.05 a ton at 0751 GMT, falling 1.17% so far this week.
Steel consumption has seasonally slowed, denting appetite for feedstocks including iron ore, analysts at Chinese consultancy Galaxy Futures said.
The average capacity utilisation rate of 247 blast furnace producers slid for the eighth straight week to reach 84.24%, Chinese consultancy Mysteel data showed.
While a reduction in steel supply is expected this month as more steelmakers started equipment maintenance, that is unlikely to be enough to counterbalance the shrinking demand, Mysteel said in a separate note, quoting a report from China’s National Development and Reform Commission (NDRC).
Earlier this week, Beijing expanded its consumer trade-in scheme in an effort to revive sluggish household consumption.
Growth in China was estimated at 4.9% for 2024 and is projected to be 4.8% this year, partly offset by subdued consumption growth and lingering property sector weakness.
Meanwhile, markets should avoid over-interpreting Beijing’s “moderately loose” monetary policy, Financial News, a publication backed by China’s central bank, said, citing economist Guan Tao.
Other steelmaking ingredients on the DCE declined, with coking coal and coke down 1.19% and 0.62%, respectively.
Most steel benchmarks on the Shanghai Futures Exchange rose. Rebar closed 0.03% higher, hot-rolled coil ticked up nearly 0.1%, wire rod edged up 0.17% while stainless steel dipped 0.04%.
Demand from steel winter stockpiling is expected to provide some support to prices and the market is awaiting potential support from policy initiatives, Mysteel added.
($1 = 7.3326 Chinese yuan)
(Reporting by Michele Pek; Editing by Sumana Nandy and Eileen Soreng)
