Posted on 20 May 2024
China's iron ore derivatives market ended the week strongly by Friday, with the most-traded iron ore futures contract on the Dalian Commodity Exchange (DCE) for September delivery closing the daytime session at Yuan 891.5/dmt ($123.4/dmt), or up 2.18% or Yuan 19/dmt from Thursday's settlement price. The price was also Yuan 24.5/dmt higher than the settlement price of last Friday, smoothing out fluctuations witnessed over the past few days, Mysteel Global noted.
"Market sentiment for major ferrous commodities in China including iron ore has brightened today by the Chinese government's latest stimulus package to shore up the property market," a Shanghai-based analyst with a futures company commented.
DCE's most-traded iron ore futures contract over January-May
Source: DCE
The new measures include the central bank's removing of the floor on mortgage rates and lowering of the minimum downpayment ratios for both first-time and second-time homebuyers, and local authorities are called to buy unsold houses from real estate developers to digest home inventories and supply them as affordable housing in the market, Mysteel Global noted.
Moreover, Chinese steelmakers' steady demand for iron ore has also bolstered ore prices, the analyst added.
"Chinese blast-furnace (BF) steel mills' hot metal production has grown further this week," he observed. According to Mysteel's latest survey among the 247 BF mills nationwide, they produced 2.37 million tonnes/day of hot metal over May 10-16, up 23,900 t/d or 1% on week.
On the other hand, domestic BF steelmakers tended to keep their in-plant stocks of iron ore at low levels to avoid financial risks as the falling steel prices had been squeezing their profit margins, as Mysteel Global reported.
This, coupled with high arrivals of imported ore cargoes lately, had led to a rebound in iron ore portside stocks, which could weigh on prices of the feedstock to some extent in the near term, Mysteel Global noted.
As of May 16, total imported iron ore stocks at 45 Chinese ports under Mysteel's tracking accumulated again to reach 148.1 million tonnes after a brief dip last week, higher by 1.3 million tonnes or 0.9% on week.
Source:Mysteel Global
