Chinese iron ore futures rose for a fifth straight session on Tuesday, supported by a bullish outlook for domestic demand stemming from hopes of more stimulus, while global supply-related issues also aided sentiment.
The Dalian Commodity Exchange’s most-traded iron ore contract, with September expiry, rose as much as 2.0% to 700 yuan ($98.54) a tonne in early trade. The benchmark contract has risen around 11% from May 12.
On the Singapore Exchange, the front-month June iron ore contract gained a further 0.8% to $94.37 a tonne, after rising 3.4% in the previous session.
Analysts said the overall market sentiment was upbeat, with steel prices also moving higher, lifted by positive data from an early-stage trial for a COVID-19 vaccine and ahead of the Chinese parliament’s key annual session on Friday.
China has been expected to roll out additional fiscal stimulus, seen taking centre stage during the parliament meeting, to cushion the blow from the pandemic.
“Adding to positive sentiment was China flagging more stimulus at the upcoming National People’s Congress,” said Tapas Strickland, director of economics at National Australia Bank in Sydney, citing China’s plans to develop its western regions.
“We expect the growth momentum in the economy will continue to be carried forward in the coming months,” said Helen Lau, analyst at Argonaut Securities in Hong Kong. “Steel demand will continue to be underpinned.”
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