Iron ore rises on strong China data, stimulus optimism

Iron ore futures rose on Wednesday, driven by stronger-than-expected industrial output in China and ongoing support for the country’s ailing property sector.

The most-traded January iron ore on China’s Dalian Commodity Exchange (DCE) closed up 1% at 971 yuan ($134.07) per metric ton, after hitting its highest levels since May 2021 earlier in the session.

The Singapore Exchange’s benchmark December iron ore was up 1.7% at $128.18 a ton as of 0752 GMT in its fourth session of gains.

China’s industrial output and retail sales growth beat expectations in October, but the underlying economic picture highlighted significant pockets of weakness with the crisis-hit property sector continuing to forestall a full-blown revival.

Prices were supported by expectations of an intangible stimulus-driven recovery in construction and manufacturing, and a more tangible decline in Australian and Brazilian shipments over the past week, said Atilla Widnell, managing director at Navigate Commodities.

China will firmly implement policy pledges of the property market to meet the housing demands of the people and promote high-quality development of the sector, said Ni Hong, minister of Housing and Urban-Rural Development.

The country’s crude steel output fell for the fourth consecutive month in October, official data showed on Wednesday, as more mills implemented furnace maintenance amid thinning margins and disappointing demand in the peak consumption season.

Analysts cautioned a possible decline in steel demand due to the winter season in China and restrictions on trading volumes for iron ore contracts announced by the Chinese government.

India’s National Mineral Development Corp (NMDC) on Tuesday reported a rise of over 15% in quarterly profit, aided by strong iron ore sales, indicating strong demand from the world’s third-largest iron ore exporter.

Steel benchmarks on the Shanghai Futures Exchange were mostly up. The most-active rebar contract strengthened 1.6%, hot-rolled coil grew 1.3%, wire rod increased 1.8%, and stainless steel was up 0.3%.

Other steelmaking ingredients Dalian coking coal edged down 0.1%, while coke was up 0.9%.

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