Iron ore futures spiked more than 2% on Friday, helped by rising steel mill production in China, although lingering property sector and steel demand concerns continued to weigh on sentiment.
The most-traded January iron ore on China’s Dalian Commodity Exchange DCIOcv1 ended daytime trade 2.1% higher at 728 yuan ($100.64) per metric ton.
On the Singapore Exchange, the benchmark September iron ore SZZFU3 jumped 2.2% to $103 a metric ton, as of 0730 GMT, paring the previous day’s losses.
“Scant mildly positive headlines have provided temporary relief from the overarching disappointment of a flailing economy. This only creates mouth-watering opportunities for iron ore bears to sell into and soak up additional speculative gains on short positions,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.
“Still, the market looks and feels as though it is psychologically preparing itself to break the US$100/mt support level.”
China’s property market woes deepened, while shipments from Australia increased despite the off-peak construction season in the world’s second-largest economy, ANZ analysts said in a note.
Fears that Chinese property giantCountry Garden 2007.HK was preparing for a debt restructuring sent its securities to a record low and deepened concerns about the property sector outlook in the absence of stronger support from Beijing.
Meanwhile, inventories of five major carbon steel items held by 184 Chinese steel mills under Mysteel’s regular survey rose further over Aug. 3-9 due to thin demand, with the total volume rising 4% week-on-week to 4.55 million metric tons.
Most steel benchmarks on the Shanghai Futures Exchange were mixed. The most-active rebar contract SRBcv1 inched up 0.1%,hot-rolled coil SHHCcv1 was unchanged,wire rod SWRcv1 lost 0.7%, while stainless steel SHSScv1 climbed 1.5%.
Other steelmaking ingredients Dalian coking coal DJMcv1 and coke DCJcv1 declined 0.6% and 0.9%, respectively.
China’s top steelmaking provinceHebei may spend two years carrying out post-flood reconstruction, state media China News Service reported.