BEIJING: Dalian iron ore futures jumped 7% on Thursday on expectations for a rebound in demand as top steel producer China returned from a week-long Lunar New Year holiday, with signs of an accelerating global economic recovery adding to the optimism.
May iron ore on China’s Dalian Commodity Exchange was up 7.1% at 1,131.50 yuan ($175.22) a tonne by 0700 GMT, after advancing to 1,134.50 yuan, its strongest level since Dec. 22.
On the Singapore Exchange, the steelmaking ingredient’s March contract gained 1.5% to $169.40 a tonne.
Chinese steel mills are expected to ramp up production to rebuild stocks as many construction sites remained open throughout the holiday, and to meet future demand.
“Sentiment has also been supported by positive outlooks from the major exporters,” said ANZ senior commodity strategist Daniel Hynes. The global iron ore market is likely to remain robust for some time, given supply concerns and China’s stronger-than-usual demand, Fortescue Metals Group Chief Executive Elizabeth Gaines said.
On Tuesday, BHP Group said it expected a continuation of strong Chinese demand in 2021, and a recovery in global crude steel production.
Dalian iron ore has risen nearly 14% this year, with tight supply adding support as Brazilian mining giant Vale SA struggles to boost output due to operational constraints.
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