SINGAPORE: Iron ore futures climbed on Thursday, buoyed by hopes of higher hot metal output as mills in China’s steelmaking hub of Hebei end regulatory checks, though weaker auto sales and a softer outlook for car exports could cap prices.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) traded 1.15% higher at 794 yuan ($115.41) a metric ton as of 0320 GMT. The benchmark April iron ore on the Singapore Exchange was 0.67% higher at $104.85 a ton.
Hot metal output declined this week as several steel mills in Hebei – the province surrounding Beijing – underwent safety and environmental inspections during key government meetings in the capital, according to a note from Shanghai Metals Market.
Iron ore demand is expected to firm next week as output recovers.
Construction companies are expected to buy 5.64 million tons of steel in March, a 17% month-on-month jump, consultancy Mysteel said.
Steel demand typically rises in March as construction resumesin warmer weather and mills ramp up production after Lunar New Year maintenance.
Production of scrap steel, which is usually melted in electric-arc furnaces and further processed to make steel, is also expected to rebound in March after a February dip, Mysteel added. Meanwhile, China’s wholesale auto sales tumbled 15% in February, and the Iran war has dampened the outlook for car exports.
China’s automobile sector has become a significant consumer of steel in recent years, offsetting some weakness from the country’s struggling property market.
Other steelmaking ingredients on the DCE jumped, with coking coal and coke rising 3.19% and 0.67%, respectively.
Steel benchmarks on the Shanghai Futures Exchange advanced.
Rebar gained 0.48%, hot-rolled coil climbed 0.4%, wire rod firmed 0.36% and stainless steel hardened 0.35%.
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