- Iron ore spot prices rose for the first time in over a week on Thursday.
- The move came despite the release of a weak China manufacturing PMI report for February.
- Dalian iron ore futures continue to rally, pointing to a stronger start for physical markets on Friday.
Iron ore’s losing streak is over.
And with Chinese futures continuing to rally in overnight trade on Thursday, there may be further gains to come on Friday.
According to Metal Bulletin, the spot price for benchmark 62% fines jumped 2.1% to $85.29 a tonne, snapping a six session losing streak in the process.
It was the largest daily gain in percentage terms since February 11.
Smaller gains were seen across lower and higher grades on Thursday.
58% fines rose 0.1% to $67.97 a tonne while 65% fines added 0.5% to $95.40 a tonne.
Over the month, the price of 65% fines shed 5.5% while 62% were flat. In contrast, 58% fines jumped 12.1%.
“The weather is getting warmer so I think the steel demand in the construction sector will recover from next month, but not strongly,” a trader at Rizhao Huaxin International Trade in Shandong province told Reuters.
The broad-based strength came despite the release of a weak China manufacturing PMI report that showed activity levels deteriorated at the fastest pace in nearly three years in February.
The move in spot markets was replicated in iron ore futures traded in Dalian which rose to 609.5 yuan, up from 600 yuan on Wednesday evening.
Steel futures in Shanghai were also bid with the most actively-traded rebar and hot-rolled coil contracts lifting to 3,750 and 3778 yuan respectively, above Wednesday’s night session close of 3,744 and 3,753 yuan.
Modest gains were also seen in coking coal and coke futures, ending the session at 1,296 and 2,124.5 yuan respectively.
Those gains were extended in overnight trade, led by further buying in steel and iron ore contracts.
SHFE Hot Rolled Coil ¥3,785 , 0.99%
SHFE Rebar ¥3,768 , 0.94%
DCE Iron Ore ¥613.50 , 1.74%
DCE Coking Coal ¥1,299.00 , 0.50%
DCE Coke ¥2,125.00 , 0.24%
The moves in futures suggest physical markets will begin on a stronger footing on Friday.
Chinese commodity futures will resume at midday AEDT, 45 minutes before the release of the latest Caixin-IHS Markit China manufacturing PMI for February.
This survey tends to focus more on small and mid-sized firms. In the government’s official PMI released on Thursday, activity levels for smaller firms were particularly weak.
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