Iron ore continues to climb higher

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  • Iron ore spot and futures markets rose across the board on Friday.
  • Signs of strengthening Chinese steel demand appears to be bolstering sentiment and prices.
  • Chinese iron ore and rebar futures were relatively unchanged in overnight trade on Friday.

Iron ore spot markets rose across the board on Friday, helped by strength in Chinese steel prices.

According to Metal Bulletin, the price for benchmark 62% fines rose by 0.9% to $67.42 a tonne, adding to the 0.6% gain reported a day earlier.

It’s added 3% since the start of the month, leaving it sitting at the highest level since April 23.

Both lower and higher grades finished Friday’s session higher.

58% fines jumped 1.7% to $40.07 a tonne. 65% fines also rallied, adding 1.1% to settle at $86.10 a tonne.

The solid gains followed another burst of buying in Chinese rebar futures.

The most actively traded October 2018 contract closed up 2.3% at 3,675 yuan, helped by signs that Chinese steel demand is strengthening.

“Chinese steel demand continues to beat expectations,” said Daniel Hynes and Soni Kumari, Commodity Analysts at ANZ Bank.

“Real estate investment and housing starts are picking up, while infrastructure spending remains elevated.”

The strength in rebar futures filtered through to iron ore futures traded separately in Dalian.

They closed Friday’s day session at 483 yuan, an increase of 2.8%. It briefly traded as high as 487 yuan, a level not seen since mid-March.

As seen in the scoreboard below, there was very limited movement in rebar or iron ore futures in overnight trade on Friday.

SHFE Rebar ¥3,683 , 0.90%
DCE Iron Ore ¥484.00 , 1.36%

The small gains hint that spot markets may begin on a stronger footing today.

However, Hynes and Kumari believe there’s further upside to come for iron ore spot markets over the medium-term.

“After traversing a soft patch earlier this current quarter, the outlook for the iron ore market has picked up in recent weeks,” said Hynes and Kumari.

“Recent Chinese economic data suggests steel and iron ore demand should remain constructive, while supply outages have curtailed the surplus.

“We maintain our view that iron ore prices have limited downside and expect prices to push back towards $69 a tonne over the next few months.”

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