Iron ore futures surged on Friday for the second consecutive session, as concerns over demand in China eased and expectations of a US Federal Reserve interest rate cut in September strengthened.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange closed 0.72% higher at 839.5 yuan ($115.90) per metric ton, following a nearly 1% increase on Thursday. Meanwhile, the benchmark July iron ore on the Singapore Exchange rose by 0.51% to $109.35 a ton.
Analysts at Jinrui Futures noted that daily hot metal output is expected to remain above current levels, despite talks of a potential production cut of up to 20 million tons of crude steel this year. The National Development and Reform Commission, responsible for managing crude steel output, has not yet responded to requests for comment.
On the other hand, data from consultancy Mysteel revealed a decrease in average daily hot metal output among surveyed steelmakers for the third consecutive week, down to 2.36 million tons as of June 7. This led analysts at Hongyuan Futures to suggest that traders closed their short positions for steel products, contributing to a rebound in the ferrous market.
Additionally, the weakening US dollar, coupled with hopes of a rate cut following recent disappointing economic data, supported commodities like iron ore and steel. China’s iron ore imports in May remained above 100 million metric tons for the third month in a row, reflecting a 7% year-on-year increase in the total imports for the first five months of the year.
Overall, the iron ore market seems to be responding positively to a combination of factors, including demand dynamics in China and global macroeconomic trends.
