Iron ore edges higher on China demand optimism, stainless steel shines

Post time: 2020-07-28

By Enrico Dela Cruz

MANILA, Aug 17 (Reuters) - Iron ore futures inched higher on Monday, with the Dalian benchmark

contract extending gains into a third session on upbeat demand prospects in top steel producer China,

although rising supply tempered investors’ optimism.

Chinese stainless steel futures took the spotlight, however, rising as much as 4.2% as prices of key

ingredient nickel on the London Metal Exchange headed back towards their highest in nearly nine

months.

The most-traded January 2021 iron ore on the Dalian Commodity Exchange ended the morning session

up 0.6% at 836.50 yuan ($120.52) a tonne.

The front-month September contract on the Singapore Exchange rose as much as 1.2% to $117.25 a

tonne.

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Dalian iron ore is on track for its sixth straight monthly gain while spot prices of the steelmaking

ingredient in China hover around a 13-month high, underpinned by Beijing’s stimulus programme for

the coronavirus-hit economy. SH-CCN-IRNOR62

“With the government looking to speed up infrastructure investment in the second half of the year, this

should see steel output remain strong,” said Daniel Hynes, senior commodity strategist at ANZ.

But rising supply kept iron ore’s gains in check, with shipments from Australia’s Port Hedland hitting

43.6 million tonnes in July, the highest ever for the month, he said in a note.

Daily iron ore shipments from Brazil rose to 1.64 million tonnes in the first five days of August, up from

1.48 million tonnes in the 23 business days of July, Hynes said.

Stainless steel on the Shanghai Futures Exchange closed the morning session up 3.4% at 14,665 yuan a

tonne.