Iron ore futures rose for a second day amid demand optimism in the wake of robust output data from China and lower inventory levels.
Steel mills in China are ramping up production to benefit from elevated prices, with the nation churning out crude steel, putting China on track for record output this year. In another sign for a strong demand, stockpiles for rebar continued to drop, while iron-ore port inventories declined for the third consecutive week.
Companies should broaden their search for sources of iron ore imports and also “actively” explore overseas ore resources, National Development and Reform Commission spokesman Jin Xiandong said at a briefing. The regulator will step up market oversight and maintain market stability with targeted measures.
Mysteel expects single-digit growth for apparent steel consumption in China to persist past 2021 as a result of the nation’s medium-term urbanization targets, according to a note from UBS Group AG, citing a call with Henry Liu, head of iron ore analytics at the pricing and market intelligence service.
Iron ore futures in Singapore rose 2.8% to $213.25 a ton by 11:07 a.m. local time, after climbing 2.9% on Monday. Contracts in Dalian jumped as much as 4.9%, and rebar and hot-rolled coil futures edged higher in Shanghai.
However, risks to the rally may be looming as supply from Brazil could pick up in the coming months. Brazilian producers are looking to generate cash and make new investments to supply a tight market underpinned by robust China-led demand, according to the president of the country’s mining industry group Ibram.
