Dalian iron ore set for weekly gains on resilient China demand
SINGAPORE: Prices of Dalian iron ore futures rose on Friday and were poised for modest weekly gains on resilient demand for the steelmaking ingredient in top consumer China, outweighing a persistent slump in China's property market.
The most-traded September iron ore contract on China's Dalian Commodity Exchange (DCE) was up 1.36% at 706 yuan ($98.31) a metric ton, as of 0245 GMT.
The contract has gained 0.57% so far this week. The benchmark July iron ore on the Singapore Exchange traded 1.42% higher at $94 a ton, but has eased 0.22% so far for the week.
The operating rate of blast furnaces in China edged higher in the week ended June 20 to reach 83.82%, up some 0.4% from the previous week, according to data from consultancy Mysteel.
Mysteel data also showed how hot metal output, a gauge of iron ore demand, inched up 0.24% week-on-week to 2.422 million tons, as of June 20.
'While demand is resilient now, the market's main focus is whether off-season demand will continue to be priced into market trading,' said broker Galaxy Futures.
Spring is typically the peak season for construction in China ahead of the rainy season from June. 'Meaningful growth in steel and iron ore demand is unlikely until new construction activity lifts,' said ANZ analysts.
China's new home prices fell in May, extending a two-year-long stagnation, official data showed on Monday. Demand for new homes in China is likely to remain substantially below the market's 2017 peak over the next few years, Goldman Sachs said late on Monday, in a projection suggesting that the world's second-biggest economy faces a long property slump.
Other steelmaking ingredients on the DCE gained ground, with coking coal and coke up 2.23% and 2.05%, respectively. Most steel benchmarks on the Shanghai Futures Exchange strengthened. Rebar rose 0.57%, hot-rolled coil and wire rod both gained around 0.7%, while stainless steel shed 0.32%.
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